Tuesday, July 10, 2012

FTC Scores Judgment Against Loan Mod Scam Purporting To Be Affiliated w/ Gov't & That Exaggerated Lawyer's Role In Obtaining Relief For Duped Victims

The Federal Trade Commission recently announced:

  • The Federal Trade Commission won a $2.6 million federal court judgment against three defendants behind a scheme that charged consumers large upfront fees and failed to deliver the mortgage modifications they promised.

  • The court also banned the three defendants for 10 years from telemarketing financial products or services; from selling mortgage modification, foreclosure rescue, and debt-relief products or services; and from collecting or attempting to collect from consumers who had agreed to purchase a mortgage-assistance product or service. The court ordered the defendants to destroy any consumer information they have collected within 30 days after the order takes effect.

  • The U.S. District Court for the Middle District of Florida, Tampa Division, entered permanent injunctions against three defendants. It also approved settlements with five more defendants in the case, and entered a default judgment against another defendant.

  • The FTC filed a complaint against the nine defendants behind the Crowder Law Group in a 2009 law enforcement sweep as part of its continuing effort to keep homeowners from being targeted by mortgage-related scams.

  • The FTC alleged that the defendants behind Crowder Law Group promised relief from burdensome mortgages by falsely claiming they could modify consumers’ mortgages and substantially reduce their monthly payments; exaggerating the role an attorney would play in obtaining a loan modification; and pretending to be affiliated with a government agency.

  • All nine defendants were charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule. The operation involved a marketing company that contracted with a direct-mailing company to send oversized postcards to homeowners nationwide whose mortgage payments were at least two months in arrears.

  • Each postcard offered financial relief to the homeowner and displayed a toll-free phone number and the signature of an attorney who was local to the homeowner and was paid $100 to accept the homeowner into the program. When homeowners called the toll-free number, a customer service representative collected financial documents and the $2,000 fee from the consumer.

  • The court found that the defendants, through the post cards and telephone procedures, assured homeowners that they had qualified for loan modifications. In fact, homeowners still had to go through the modification process with lenders, and it which was usually unsuccessful.
For the FTC press release and links to related court documents, see FTC Wins $2.6 Million Court Judgment Against Operation That Made Exaggerated Claims for Mortgage and Foreclosure-Relief Services (Defendants Charged Consumers $2,000 Each for Services They Did Not Perform).

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