On September 1, 2016, the Federal Trade Commission (FTC) announced it entered into a stipulated order for permanent injunction against a group of regional law firms over allegations the firms violated the Federal Trade Commission Act by providing illegal mortgage modification services. According to the FTC, the firms charged illegal up-front fees and falsely promised homeowners that they could obtain loan modifications.
The firms allegedly marketed their loan modification services to financially distressed homeowners and charged between $1,000 and $4,000 in up-front fees for mortgage modification services. According to the FTC, the firms promised homeowners they could obtain reduced interest rates or lower monthly payments if they hired the firms. The firms also allegedly promised to provide legal services to assist homeowners if their loans went into foreclosure, and “loan audits” to identify predatory lending terms or other errors in loan documents. Many homeowners who signed up for the services (and paid the up-front fee), allegedly never received legal representation or loan modifications.
In July 2014, the FTC brought claims against the law firms for engaging in abusive and deceptive sales practices, charging illegal up-front fees for loan modifications, and other violations of the Telemarketing Sales Rule and the Mortgage Assistance Relief Services Rule. After two years of litigation, three of the defendants entered into the joint stipulation for permanent injunction. The injunction bars these defendants from selling certain debt relief products, making any false or misleading representations about financial products, and from violating the Do-Not-Call Registry rules. The stipulation also imposes an $8 million judgment, which is suspended upon surrender of the Defendants’ frozen assets. The Court imposed a similar injunction against the non-settling defendants, who were found liable in July 2016 after the Court’s order on summary judgment. The non-settling defendants must pay a monetary judgment of $13.5 million.
The post FTC Announces Settlement with Law Firms Over Alleged Debt Relief Scheme appeared first on Consumer Finance Insights (CFI).