Nationwide Loan Modification Scam Sweep Begins As FTC Announces Coordinated Effort Of 25 Federal, State Agencies Involving 189 Legal Actions

The Federal Trade Commission announced last week:

• Federal Trade Commission Chairman Jon Leibowitz, joined by California Attorney General Jerry Brown, [Wednesday] announced Operation Loan Lies, a coordinated national law enforcement effort to crack down on mortgage modification scams. The operation involves 189 actions by 25 federal and state agencies(1) against defendants who deceptively marketed foreclosure rescue and mortgage modification services. The FTC actions, which affect consumers throughout the nation, are being announced in southern California, where the scams originated.
  
  “These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz said. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company.”
  
  The FTC announced four lawsuits,(2) bringing to 14 the number of mortgage foreclosure rescue and loan modification scam cases the Commission has brought since April. Twenty-three state attorneys general and other agencies are participating in the operation, taking action against 178 companies engaged in these types of deception. The FTC also announced a settlement in a lawsuit filed last November.

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• The FTC also released “Real People. Real Stories,” a three-and-a-half minute video about keeping your home. It features people targeted by foreclosure rescue scammers sharing lessons learned from their experiences. The FTC is distributing the video, and a version in Spanish, to more than 5,000 housing counseling and consumer protection organizations around the country, and posting them at FTC.gov/yourhome and YouTube.com/FTCVideos.

For the entire FTC press release, see Federal and State Agencies Target Mortgage Foreclosure Rescue and Loan Modification Scams (FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners).

(1) The 25 Federal & state agencies are:

• U.S. Federal Trade Commission,
• U.S. Attorney's Office for the Central District of California (Los Angeles),
• Arizona Attorney General's Office,
• California Department of Justice,
• California Department of Real Estate,
• State Bar of California,
• Colorado Attorney General's Office,
• Idaho Attorney General's Office,
• Illinois Attorney General's Office,
• Iowa Department of Justice,
• Kansas Attorney General's Office,
• Maine Attorney General's Office,
• Maine Department of Professional and Financial Regulation, Bureau of Consumer Protection,
• Maryland Department of Labor, Licensing, and Regulation, Office of the Commissioner of Financial Regulation,
• Massachusetts Attorney General's Office,
• Michigan Attorney General's Office,
• Missouri Attorney General's Office,
• New Jersey Attorney General's Office,
• New Jersey Department of Banking and Insurance,
• New Mexico Attorney General's Office, Consumer Protection Division,
• North Carolina Department of Justice,
• Ohio Attorney General's Office,
• Oregon Department of Justice,
• Texas Attorney General's Office,
• Washington Attorney General's Office.

(2) The four lawsuits (with links to the FTC complaints) filed by the FTC target three California firms:

• Aliso Viejo-based Lucas Law Center (other defendants: Future Financial Services, LLC, Paul Jeffrey Lucas, Christopher Francis Betts, and Frank Sullivan),
• Orange-based U.S. Foreclosure Relief Corp. (firm used eight aliases – U.S. Foreclosure Relief, Lighthouse Services, Pacific Shore Financial, California Foreclosure Specialists, H.E. Service Company, Safe Harbor, Pomery & Associates, and Homeowners Legal Assistance. Other defendants are George Escalante, Cesar Lopez, and Adrian Pomery, Esq.), and
• Santa Ana-based Loss Mitigation Services Inc., (other defendants: Synergy Financial Management Corporation (d/b/a Direct Lender), Dean Shafer, Bernadette Perry, and Tony Perry),

and Coeur d'Alene, Idaho-based Apply2Save Inc. (other defendants: Sleeping Giant Media Works, Inc., and Derek Oberholtzer).

In addition to these cases, the FTC reached a settlement with Foreclosure Solutions, LLC and Timothy Buckley (Plaintiff's Complaint, Settlement/Stipulated Final Judgment) who claimed that, for a fee often exceeding $1,000, they would stop foreclosure (see press release dated April 29, 2008).