Defendants in Phony Mortgage Relief Scheme to Pay Nearly $3.6 Million
The defendants in an alleged mortgage relief scam will surrender their assets and be banned permanently from providing mortgage relief and debt relief services to consumers under a settlement with the Federal Trade Commission (FTC).
The settlements require the defendants to pay nearly $3.6 million to redress consumer victims. This is the FTC's largest judgment to date against a purported mortgage assistance relief provider.
In 2012, as part of the Distressed Homeowner Initiative, a multi-agency federal enforcement crackdown, the FTC charged 11 companies and five individuals with running an illegal mortgage relief scheme, which operated under various names, including Prime Legal Plans. Using Reaching U Network, a sham nonprofit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments. The FTC obtained a court order shutting down the operation and freezing the defendants' corporate and personal assets pending settlement of the case.
"Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "They broke the law by taking money upfront and making false promises."
The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers' loans and providing access to full-service, expert legal representation to fight their lenders.
The defendants also allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would "halt the foreclosure process" and save their homes. But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt.
In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule's ban on advance fees for mortgage relief. The FTC also asserted that the defendants placed numerous calls to numbers listed on the National Do Not Call Registry.
Under the settlements, the defendants are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or service or making advertising claims that are unsupported by competent and reliable evidence. They also are prohibited from placing unsolicited calls both to numbers listed on the National Do Not Call Registry and to any number in an area code for which they have not paid the fee to access the list of numbers on the National Do Not Call Registry.