The Federal Trade Commission (FTC) announced yesterday that it had filed four lawsuits against individuals and entities preying on homeowners seeking loan modifications and foreclosure relief. The complaints filed were the result of “Operation Loan Lies,” a joint effort of federal and state law enforcement agencies currently pursuing 189 actions “against defendants who deceptively marketed foreclosure rescue and mortgage modification services.”
The four lawsuits announced by the FTC bring the total number of FTC-initiated mortgage foreclosure rescue and modification cases to 14 since April. The decision to file the complaints was made by a unanimous 4-0 vote of the Commissioners and was based on the FTC having a “reason to believe” a violation of the law is occurring or has occurred in the past and that these proceedings are in the public interest. The allegations against the defendants include, among other things, false claims as to the success of loan modifications, the ability to stop foreclosures and false promises to return payments received in advance for failure to achieve those objectives. The defendants include:
- US Foreclosure Relief, which is alleged to have “falsely claimed years of experience and a high success rate and promised quick results,” for violations of the FTC’s Do Not Call Rule by calling homeowners on the National Do Not Call Registry.
- Lucas Law Center for allegedly using “an attorney to circumvent state prohibitions against receiving a fee before providing any services” and “falsely representing that they would obtain mortgage loan modifications….”
- Loss Mitigation Services for the direct-mail targeting of homeowners with increased mortgage payments, who had made late payments and whose homes were in foreclosure. The defendants also misrepresented their association with the homeowner’s lender or mortgage servicer.
- Apply2Save, an internet company, which allegedly “charged consumers up-front fees of up to $995, claiming they could obtain a loan modification in 30 to 90 days.” Most consumers did not obtain modifications and foreclosure relief.
The announcement also discussed the earlier settlement the FTC reached with Foreclosure Solutions, LLC and Timothy Buckley related to foreclosure fraud. “The settlement order prohibits the defendants from misrepresenting that any foreclosure can or will be stopped, postponed, or prevented, or the likelihood that these results will be obtained” and certain other misrepresentations made by the defendants. The $8.5 million judgment imposed by the settlement order will be suspended following the defendants’ return of “approximately $5,000 in cash and other property, including the surrender of any net proceeds from the sale of five houses.” The full judgment will, however, be enforced against the defendants if they misrepresented their financial condition.
Additional cases brought by the FTC under Operation Loan Lies include: