Friday, June 04, 2010

Feds Tack On Five Individuals, Firms To List Of Targets In Ongoing Civil Suit Against Alleged Foreclosure Rescue Racket Peddling Forensic Audits

The Federal Trade Commission recently announced:
  • The Federal Trade Commission has named several new defendants and added new charges concerning so-called “forensic audits” to its lawsuit against an operation that allegedly bilked homeowners who were trying to lower their mortgage payments. The action is part of an ongoing crackdown on scams that target consumers who are behind in their mortgage payments or at risk of foreclosure.(1)


  • According to the FTC’s amended complaint, the new defendants, along with Smith and Gromann, offered “forensic audits” – checking a homeowner’s loan documents for law violations that would give them leverage in negotiating with lenders to obtain a loan modification or a “short sale” (sale of a house for an amount less than the mortgage balance). Their ads stated, “We have found that between 80-90% of all loans that we have audited have some form of rights violations.” They collected $995 in advance for each audit even though an audit was unlikely to assist in negotiations with lenders, the complaint alleges.

For the FTC press release, see FTC Broadens Case Against Mortgage Relief Scheme; Charges That 'Forensic Audits' Were Unlikely to Help Homeowners.

See Federal Trade Commission v. The Debt Advocacy Center, LLC, et al. for links to available court documents in this case.

(1) According to their press release, the FTC has added as defendants Bradford R. Geisen; Maurice Jackson; Patrick Butler; Credit Services Alliance Inc.; and CreditLawGroup, a law firm run by two of the original defendants, John W. Smith and Glenn E. Gromann. The original defendants also included The Debt Advocacy Center LLC; Smith, Gromann & Davidson P.A.; and Kevin McCormick.