Federal, State Agencies Target Mod Scams

Posted by Orb Staff on November 25, 2009 No Comments
Categories : Mortgage Servicing

Federal Trade Commission (FTC) Chairman Jon Leibowitz, Sen. Harry Reid, D-Nev., Nevada Attorney General Catherine Cortez Masto, and Assistant Attorney General Tony West of the Civil Division of the U.S. Department of Justice have announced Operation Stolen Hope as part of a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams.

The operation involves 118 actions by 26 federal and state agencies. The FTC actions were announced in Nevada Tuesday.

‘These operators targeted consumers who were on the brink of financial disaster, and instead of holding them back, they pushed them over,’ Leibowitz said.

The FTC announced six lawsuits, bringing to 28 the number of mortgage relief cases the commission has brought since the housing crisis began. Twenty-five state attorneys general and other state and local agencies announced 112 similar actions.

In the actions announced by the FTC, the defendants falsely claimed that they would obtain mortgage modifications that would make consumers' monthly mortgage payments substantially more affordable. After charging large up-front fees, they often did little or nothing to help homeowners renegotiate their mortgages.

According to the FTC's complaints, some of the defendants falsely claimed a high success rate and promised to give consumers refunds if they failed to modify their mortgages, and others misrepresented that they were affiliated with the federal government or consumers' mortgage lenders or servicers.

Each of the cases allege violations of the FTC Act. In addition, several cases allege violations of the Telemarketing Sales Rule or the Credit Repair Organizations Act. In each case, the FTC is asking the court to stop the defendants' deceptive claims and make them forfeit their gains. In five of the cases, the court already issued a temporary restraining order and froze the defendants' assets.

"Thanks to the work of the people here today and the work we've done in Congress, we are protecting families from perpetrators and stopping scams before they start," Reid said in a statement. "The laws we've passed and the programs we've created not only give the authorities the right tools to fight these con artists, they give homeowners the ability to stand up for themselves and fight back, too."

A complete rundown of the companies named in the FTC actions is available on the commission's Web site.

SOURCES: Federal Trade Commission, Office of Sen. Harry Reid

Register here to receive our Latest Headlines email newsletter




Leave a Comment