The CFPB announced three lawsuits against foreclosure relief companies and their operators that collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiated troubled mortgages.
The suits seek compensation for victims, civil fines and injunctions against the alleged scammers.
The CFPB alleges that the companies and individuals took part in a number of illegal practices including:
- collecting fees before obtaining a loan modification;
- inflating success rates and likelihood of obtaining a modification;
- duping consumers into thinking they would receive legal representation;
- making false promises about loan modifications to consumers.
Clausen & Cobb Management Company, Inc. and Siringoringo Law Firm
According to the CFPB complaint [PDF], Clausen & Cobb Management and owners Alfred Clausen and Joshua Cobb, as well as Stephen Siringoringo and his Siringoringo Law Firm, charged illegal advance fees for mortgage loan modifications to thousands of California homeowners. The operation charged an initial fee ranging from $1,995 to $3,500, as well as monthly fees of $495.
The Mortgage Law Group and the Consumer First Legal Group
The CFPB charges [PDF] that the Mortgage Law Group, LLP, the Consumer First Legal Group, LLC, and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford, allegedly took in more than $19.2 million in fees from over 10,000 distressed homeowners nationwide. According to the compaliny, most of the money came from illegal advance fees for so-called loan modification services.
Hoffman Law Group
In a lawsuit [PDF] filed jointly with the Florida Attorney General, the CFPB alleges that the Hoffman Law Group (HLG), its operators, Michael Harper, Benn Wilcox, and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group accepted more than $5 million in illegal upfront fees from homeowners.
The operation allegedly sold consumers the chance to join mass lawsuits as plaintiffs on the false promise that the suit would help them get mortgage loan modifications or foreclosure relief. HLG typically charged an upfront fee of $6,000 plus a months maintenance fee of $495.
In similiar action Wednesday, the FTC filed six lawsuits against mortgage relief companies that allegedly preyed on distressed homeowners by misrepresenting that they typically could lower homeowners’ mortgage payments and interest rates or prevent foreclosure, and illegally charging advance fees.
Danielson Law Group
The FTC alleges that the Utah-based operation touted a success rate that exceeded 90% in order to entice consumers to pay fees ranging from $500 to $3,900 to negotiate loan modifications on behalf of distressed homeowners. The operation falsely promising that attorneys would negotiate loan modifications with substantially reduced mortgage payments using their special relationships with lenders or mortgage analysis reports produced by a proprietary software program.
FMC Counseling Services, Inc.
The FTC has alleged that from at least February 2011, this Fort Lauderdale, Fla.-based operation made false claims that it was affiliated with the federal government’s Making Home Affordable assistance program, and that it would renegotiate consumers’ mortgages, reducing them by several hundred dollars.
The company collected more than $600,000 in payments from hundreds of consumers.
Since at least 2011, this Jacksonville, FL-based operation told consumers they would get a loan modification or that their changes of getting one was 85% to 100%.
The defendants typically collected an upfront fee of $1,000 to $4,000, or an ongoing monthly fee of $500 or more. In some cases, according to the FTC, they also told consumers not to pay their mortgages while their supposed loan modifications were pending, and that they would conduct an audit of consumers’ mortgage documents to find errors or fraud committed by the lender.
Mortgage Relief Advocates
According to the FTC complaint, from at least April 2010 the California-based operation sold fraudulent mortgage assistance services on its website and through telemarketing. The operation charged up-front fee of $1,000 to $3,200, the defendants are alleged to have rarely provided the promised mortgage relief.
Home Relief Foundation
The FTC alleges that from October 2010 to December 2013 the Austin, Texas-based operation made false promises that because of their affiliation with attorneys, their affiliation with a government program, their knowledge of the industry, and their relationships with mortgage lenders, Home Relief Foundation would be able to lower consumers’ interest rates and monthly mortgage payments by charging fees ranging from $500 to $4,000,
CD Capital Investments
The FTC has alleged since mid-2011, this Southern California-based operation collected more than $1 million in revenues by often promising consumers would receive mortgage relief services within two to four months, and often claimed affiliation with the Obama Administration’s “Making Home Affordable Program.”
In addition to announcing the lawsuits today, the CFPB and the FTC released resources to help consumers better understand and recognize mortgage modification scammers.
“These companies pocketed illegal fees—taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began,” CFPB Director Richard Cordray says in a prepared statement about the lawsuits. “These practices are not only illegal, they are reprehensible.”