Federal agency sues over mortgage relief fraud
The U.S. Federal Trade Commission (FTC) has filed lawsuits against three companies, accusing the companies of using fraudulent means to swindle homeowners out of millions of dollars. The ultimate goal of the lawsuits is to immediately force the companies to shut down.
According to the lawsuit, the companies used fraudulent means to convince homeowners who were in danger of foreclosure that they would receive mortgage relief by utilizing the companies’ services. These schemes were largely the same: the companies told the homeowners that they could significantly reduce their mortgage payments for an upfront fee, which was usually in the thousands. They then told the homeowners to stop making mortgage payments and cease communication with banks while the companies allegedly negotiated better deals on their behalf.
Of course, the companies didn’t actually negotiate those deals. This put the homeowners in a more difficult financial situation than they had been in before, and they were also out the large fee they had paid to the companies for their “help.”
In the lawsuits, the FTC accuses the companies of hawking fraudulent mortgage relief schemes that were a violation of the FTC Act and the Mortgage Assistance Services rule. Those laws ban advance payment for mortgage relief services.
The FTC has reportedly filed more than 40 similar lawsuits under its “distressed homeowner initiative,” which is a federal effort to stop predatory mortgage relief for causing harm to homeowners that are already in financial distress. Hopefully, the agency continues to investigate and prosecute those responsible for these harmful, shameful schemes.
Source: CBS News, “FTC sues firms in mortgage aid scam crackdown,” Kathy Kristof, Oct. 9, 2012