Ohio AG Files Civil Suits Against Two Firms For Allegedly Running Upfront Fee Loan Modification Rackets

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [...] sued two companies that allegedly targeted then ripped off homeowners threatened by foreclosure.(1) The lawsuits are part of a national sweep on foreclosure rescue scams announced this afternoon by the Federal Trade Commission.

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• [The] lawsuits are the result of an ongoing effort by Cordray in holding companies accountable for violating Ohio law in the wake of the foreclosure crisis. To date, Cordray has issued approximately 30 cease and desist notices and filed seven lawsuits against foreclosure rescue operations targeting Ohioans. Additionally, Cordray has sued two loan servicers for unfair or deceptive loan modification practices.

For the Ohio AG press release, see Cordray, FTC Take on Foreclosure Rescue Companies.

(1) In a lawsuit filed in Cuyahoga County (see State of Ohio v. Debt Advocacy Center), Cordray accused Debt Advocacy Center (DAC) of failing to deliver services it promised. The lawsuit alleges that the Cleveland-based DAC advertised loan modification and loss mitigation services to consumers backed by a 100% money-back guarantee. DAC then collected upfront payments ranging from $500-$3,800, advised consumers to not make monthly mortgage payments and then never delivered the services.

In a lawsuit filed in Franklin County (see State of Ohio v. Kirkland Young, LLC), Cordray alleges that Kirkland Young, LLC, based in Florida, charged consumers an upfront fee that exceeded the $75 initial fee allowed by Ohio law. In complaints filed with the Attorney General’s office, consumers said that Kirkland Young required customers to pay approximately $500 into an escrow account monthly and pay “closing costs” if a loan modification was obtained. Additionally, the lawsuit alleges that the company solicited consumers through phone calls but is not registered in Ohio as required by law and further violated the law by making misleading or false statements to consumers during the call.