Mortgage Relief Pitchmen Settle FTC Charges Of Deceiving Consumers, Collecting Illegal Fees

Image courtesy of (Karen Chappell)

When seeking to refinance or modify a home loan, consumer advocates urge consumers to seek assistance from professionals that have no financial stake in the outcome. However, that doesn’t appear to be the case for a group of pitchmen who have agreed to settle Federal Trade Commission charges they conned consumers into paying hefty fees for worthless mortgage relief services.

The FTC announced today that a group of Utah-based defendants claiming to be legal experts in loan modifications promised legal help to consumers to avoid foreclosure or get relief from unaffordable mortgages but then did little or nothing to help.

According to the FTC complaint [PDF], Philip Danielson, and his company, Danielson Law Group, lured consumers into paying $500 to $3,900 by falsely promising that attorneys would negotiate loan modifications that would substantially reduce consumers’ mortgage payments.

The FTC charged the defendants with violating the FTC Act and the Mortgage Assistance Relief Services (MARS) Rule, now known as Regulation O. The Rule bans mortgage foreclosure rescue and loan modification service providers from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

The defendants touted a success rate that exceeded 90% purportedly based on their legal expertise and a pre-qualification process that identified clients that they knew they could help.

The complaint alleges that the company used the name Danielson Law Group and other attorney and law firm names to look like they had lawyers all over the country, even though many consumers never met or spoke to an attorney.

At the FTC’s request, a U.S. district court temporarily halted the operation and froze the defendant’s corporate and personal assets.

Under the proposed settlement, the company and operators are banned from participating in the mortgage relief and debt relief industries, and are prohibited from misrepresenting various features of any product or services or making advertising claims that are unsupported by competent and reliable evidence.

Additionally, the FTC imposed a $28.6 million judgement, reflecting the total amount of fees taken in by the scheme. However, the judgement will be suspended provided the defendants surrender certain of their assets, including a $200,000 house in Utah as required by the settlement orders.

Mortgage Relief Pitchmen Settle FTC Charges That They Deceived Consumers [FTC]