Florida AG Hits Orlando Loan Modification Firm With First Lawsuit Under New State Foreclosure Fraud Law

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum today announced that his Economic Crimes Division has filed a lawsuit against an Orlando company allegedly providing loan modification services to homeowners facing foreclosure -- the first lawsuit filed under the new Foreclosure Rescue Fraud Protection Act. According to the lawsuit filed today in Orange County, FMA Servicing, Inc. and its owners are in violation of the law which, among other provisions, prohibits a company providing foreclosure-related rescue services from charging consumers any up-front fee.

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• An investigation conducted by the Economic Crimes Division revealed that FMA Servicing, which does business under the name Financial Management Advisors,(1) allegedly charges an up-front fee as high as $2,500 to homeowners seeking loan modification services. Additionally, the lawsuit claims the company misrepresented relationships with lenders and falsely advertised the presence of attorneys and certified public accountants on staff. The Attorney General has also filed a motion seeking to temporarily prevent FMA Servicing from charging up-front fees.

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• Florida Statutes 501.1377, which took effect on October 1, 2008, protects homeowners who are in foreclosure or nearing foreclosure from companies offering potentially fraudulent foreclosure "rescue" services. Specifically, the statute governs companies providing foreclosure-related rescue services including loan modification and short sale services. These companies are prohibited from charging homeowners an up-front fee for these services and must provide homeowners with a written agreement.

For more, see McCollum: First Lawsuit Filed Under New Foreclosure Rescue Fraud Law (Orlando company sued for allegedly engaging in fraudulent foreclosure rescue services).

For the lawsuit, see State of Florida v. FMA Servicing, Inc., et al.

(1) Other defendants named are Edward Billings, Joseph Esposito, and Salvatore Esposito. They face civil charges of violating:

• §§501.1377(3)-(4), Florida Statutes, (2008), Violations Involving Homeowners during the Course of Residential Foreclosure Proceedings;
• §817.06(1), Florida Statutes, (2008), False Advertising;
• §817.41(1)-(2), Florida Statutes, (2008), Misleading Advertising; and
• §865.09(3), Florida Statutes (2008), Fictitious Name Act.