The Federal Trade Commission today announced a coordinated national effort to crack down on mortgage rescue scams, with federal regulators and 23 state attorneys general taking action against 178 companies accused of deceptively marketing foreclosure rescue and loan modification services.
At a press conference in Los Angeles with California Attorney General Jerry Brown, the FTC announced four new lawsuits, bringing the total number of mortgage foreclosure rescue and loan modification scam cases the commission has brought since April to 14.
The FTC alleged that US Foreclosure Relief, Lucas Law Center, Loss Mitigation Services and Apply2Save claimed they would either obtain a mortgage loan modification or stop foreclosure, charging consumers the equivalent of one month’s mortgage payment or more in advance. The companies then did little or nothing to help homeowners renegotiate their mortgages or stop foreclosure, the lawsuits allege.
"These con artists see the high foreclosure rates as an opportunity to prey on people in distress," FTC Chairman Jon Leibowitz said in a press release announcing "Operation Loan Lies."
Brown announced five lawsuits against 21 individuals and 14 companies who "ripped off thousands of homeowners desperately seeking mortgage relief," the attorney general’s office said in a press release.
The FTC is seeking redress for consumers and a permanent bar on the companies’ allegedly deceptive practices. Lawsuits against all the companies but Apply2Save were filed in U.S. District Court for the Central District of California. The suit against Apply2Save was filed in U.S. District Court for the District of Idaho.
The lawsuit against US Foreclosure Relief — filed by FTC and the states of California and Missouri — names several aliases used by the company, including 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.
The lawsuit claims US Foreclosure relief used aggressive telemarketing tactics, soliciting desperate homeowners and charging an upfront fee ranging from $1,800 to $2,800 for loan modification services. Consumers paid the company more than $4.4 million in one nine-month period, but in most instances it failed to provide mortgage relief services, the lawsuit said.
Defendants in the Apply2Save case include Apply2Save Inc., Sleeping Giant Media Works Inc. and Derek Oberholtzer.
The FTC said Lucas Law Center’s aliases included LUCASLAWCENTER "INCORPORATED" and Future Financial Services LLC. Paul Jeffrey Lucas, Christopher Francis Betts and Frank Sullivan were also named as defendants in that case. …CONTINUED
Loss Mitigation Services used aliases including Loss Mitigation Services Inc. and Synergy Financial Management Corporation (doing business as Direct Lender), the FTC said in its complaint. Other defendants were Dean Shafer, Bernadette Perry, and Tony Perry.
The FTC also announced a settlement with Foreclosure Solutions LLC and Timothy Buckley, which includes an $8.5 million judgment that will be suspended upon turnover of approximately $5,000 in cash and other property, including the surrender of any net proceeds from the sale of five houses.
In addition to US Foreclosure Relief, Brown said California has filed suit against Irvine-based U.S. Homeowners Assistance; Home Relief Services LLC, which has offices in Irvine, Newport Beach and Anaheim, and its legal affiliate, the Diener Law Firm; RMR Group Loss Mitigation LLC and its legal affiliates Shippey & Associates and Arthur Aldridge; and United First Inc., and its lawyer affiliate Mitchell Roth, based in Los Angeles.
U.S. Homeowners Assistance is accused of claiming to be a government agency with a 98 percent success rate in aiding homeowners, though the company is not even certified as an approved housing counselor by the U.S. Department of Housing and Urban Development and none of the company’s known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500.
The lawsuit seeks $7.5 million in civil penalties, full restitution for victims, and a permanent injunction to keep U.S. Homeowners Assistance from offering foreclosure consultant services.
California’s lawsuit against Home Relief Services charges that the company promised to help troubled borrowers lower interest rates to 4 percent, convert adjustable-rate mortgages to low fixed-rate loans and reduce principal up to 50 percent within 30 to 60 days. None of the known victims received a modification, despite paying more than $4,000 in upfront fees, the complaint said.
The suit seeks $10 million in civil penalties, full restitution for victims and a permanent injunction.
RMR Group Loss Mitigation is accused of bilking more than 500 victims out of nearly $1 million by soliciting homeowners through telephone calls and in-person home visits and promising a 98 percent success rate and a money-back guarantee. None of the known victims received any refunds or modifications with the assistance of defendants. The suit seeks $7.5 million in civil penalties, full restitution for victims and a permanent injunction against the company.
United First is accused of conning 2,000 desperate homeowners into paying exorbitant fees for "phony lawsuits" to forestall foreclosure proceedings. The lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home’s value, according to a July 6 lawsuit against the company. The lawsuit seeks $2 million in civil penalties, full restitution for victims and a permanent injunction against the company.
What’s your opinion? Leave your comments below or send a letter to the editor.