Mortgage Relief Company Temporarily Closed for Failing to Provide Services
A federal court temporarily shut down a Los Angeles-based company for failing to provide the mortgage relief services it advertised.
The Federal Trade Commission (FTC) charged Wealth Educators with failing to provide the help they promised homeowners, while charging a hefty up-front fee. The company also told consumers to stop making their monthly mortgage payments, leading some facing the prospect of foreclosure.
According to the FTC's complaint, since at least October 2012, the Wealth Educators defendants have operated under a variety of names, including Legal Educators USA & Co., Stargate Mutual & Associates, Providence Financial Advocates, and Providence Financial Audits, while selling supposed mortgage relief services to consumers.
The defendants used outbound telemarketing to pitch their programs to consumers. Many of the targeted consumers were homeowners in financial trouble, whom the company promised it could help by lowering their monthly mortgage payment, lowering their mortgage interest rate, or obtaining loan modification or restructuring.
The defendants also used websites allegedly set up by Veronica Sesma, the owner and president of Wealth Educators, to advertise the supposed mortgage relief services.
Before providing any services, however, Wealth Educators charged consumers an up-front fee ranging from $1,000 to $5,000, promising the money would be fully refunded if the company didn't provide the relief it promised.
Unfortunately, according to the complaint, while Wealth Educators told many consumers they could get them a loan modification, typically through a government-sponsored program, and even quoted a specific amount consumers' mortgage payments would be reduced, the company often did not provide the promised relief services.
In addition, the company told consumers to stop communicating with their lenders, delaying them from discovering that Wealth Educators had not obtained the promised mortgage relief. Consumers who tried to get their money back could not do so.
The FTC charged the defendants with violating the FTC Act and the Mortgage Assistance Relief Services (MARS) Rule, now known as Regulation O. The Rule bans mortgage foreclosure rescue and loan modification service providers from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.
In filing the complaint, the FTC is seeking an immediate halt to the defendants' allegedly deceptive conduct, along with an asset freeze to ensure the preservation of funds for possible consumer redress.