The former general counsel of Capital City Mortgage Corp., a Washington, D.C.-area mortgage lender whose lending practices the Federal Trade Commission is challenging in federal court, has settled FTC charges that his actions violated federal law.

The consent decree against Eric J. Sanne permanently bars him from participating in any debt-collection business and orders him to pay $20,000. The consent decree and order is for settlement purposes only and does not constitute an admission by Sanne of a law violation.

In January 1998, the FTC filed a complaint against Capital City and its president, Thomas K. Nash, alleging that the defendants deceived consumers about various loan terms leading to inflated monthly balances, overdue balances, service fees and pay-off amounts. The FTC’s complaint stated that these practices led to foreclosure in many instances. The FTC also alleged the defendants foreclosed on borrowers who were in compliance with their loan terms and failed to release liens on title borrowers’ homes even after the loans were paid off.

The FTC later amended the complaint to add Sanne. The FTC alleges that in his position as general counsel, Sanne violated the Fair Debt Collection Practices Act and the FTC Act by engaging in unfair and deceptive debt collection practices, including sending letters to borrowers that falsely claimed he was from a third party collecting a debt rather than a Capital City employee and by seeking to collect money not owed.

Capital City is a subprime market lender that extends credit to consumers, small businesses and churches in the Washington metropolitan area.

***

Send tips or a letter to the editor to samantha@inman.com or call (510) 658-9252, ext. 140.

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