FTC Announces New Lawsuits Against Upfront Fee Loan Modification Firms

On the heels of yesterday's "declaration of war" (see 'We Will Find You and We Will Punish You') by the Federal government against loan modification scams, the Federal Trade Commission announced the filing of three new lawsuits against firms it accuses of making false representations in conncetion with the improper clipping of homeowners for upfront fees, only to do little or nothing with regard to modifying their home loans. The new lawsuits involve:

• Federal Loan Modification Law Center(1) (FedMod). FedMod markets mortgage loan modification and foreclosure relief services to homeowners who are in financial distress, delinquent on their mortgages, or in danger of losing their homes to foreclosure. In radio advertisements, the FTC alleges, FedMod induces homeowners to call its toll-free number by misrepresenting that it is part of or affiliated with the federal government, although it is not.

For the lawsuit, filed in Los Angeles, California, see FTC v. Federal Loan Modification Law Center LLP, et al.

• Bailout.hud-gov.us. According to the FTC’s complaint, defendant Thomas Ryan used a foreign Internet registrar to falsely register two sites – bailout.hud-gov.us and bailout.dohgov.us. The sites were used to entice financially strapped consumers to seek mortgage loan modification services under the guise that the services were associated with, or were actually, the U.S. government, including HUD and the Treasury Department.

For the lawsuit, filed in the District of Columbia, see FTC v. Ryan.

• Home Assure d/b/a Expert Foreclosure.(2) In this case, the FTC alleges that the defendants promise consumers facing imminent home foreclosure that they can stop the foreclosure, regardless of the amount the consumer owes his or her lender. The defendants are charged with falsely claiming that they have special relationships with lenders, have helped thousands of consumers avoid foreclosure, and will provide a 100 percent satisfaction money-back guarantee. They typically charge consumers an up-front fee of $1,500 to $2,500 but, the FTC alleges, do little or nothing to help them avoid foreclosure and fail to give refunds when foreclosures are not stopped.

For the lawsuit, filed in Tampa, Florida, see FTC v. Home Assure, LLC, et al.

The FTC press release also contained a reminder of two additional lawsuits filed at the end of March against New Jersey outfits Hope Now Modifications LLC (go here for lawsuit) and New Hope Property LLC d/b/a New Hope Modifications LLC (go here for lawsuit), alleging that the defendants misled consumers about their ability to provide mortgage loan modification and foreclosure relief, and misrepresented that they were affiliated with or part of the HOPE NOW Alliance, the non-profit, HUD-endorsed organization that is a broad-based coalition of credit and home ownership counselors, lenders, and other mortgage market participants. These are the same two firms that were also recently sued by the New Jersey Attorney General for similar allegations.

The FTC notes:

• This brings to 11 the number of loan modification and mortgage foreclosure rescue scams brought by the FTC in the last year. More than 20 state law enforcers also have taken actions against companies engaged in these types of deception, including 22 brought by Illinois Attorney General [Lisa] Madigan.

• The FTC also announced [yesterday] that it has sent warning letters to 71 companies who may be deceptively marketing mortgage loan modification or foreclosure rescue services. The FTC identified these companies through a nationwide review of Internet and other advertisements and warned these companies that their ads may violate federal law. State law enforcers also have sent warning letters to companies that are potentially engaging in such illegal practices, including more than 60 warning letters sent by Attorney General Madigan.

For the entire FTC press release, see Federal and State Agencies Crack Down on Mortgage Modification and Foreclosure Rescue Scams (FTC, State Enforcers Sue Scammers, Warn Others; Announce Education Campaign Designed to Reach Borrowers Directly).

(1) The defendants in this case are: Federal Loan Modification Law Center LLP doing business as Federal Loan Modification Law Center and under other various other names; Anz & Associates, PLC; LegalTurn, Inc.; Federal Loan Modification LLC; Boaz Minitzer, Nabile "Bill" Anz, and Jeffrey Broughton.

(2) The defendants in this case are: Home Assure, LLC, B Home Associates, LLC, doing business as (dba) Expert Foreclosure, Michael Grieco, Michael Trimarco, Nicholas Molina, and Brian Blanchard. The defendants also have been the subject of law enforcement actions or investigations by the Minnesota, North Carolina, and Florida Attorneys General, according to the FTC press release.