Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Operation Mis-Modification targets six mortgage relief scams, (Jul 23, 2014)

By Greg Hammond, J.D.

As part of a joint federal and state enforcement sweep, known as Operation Mis-Modification, the FTC has filed complaints against six mortgage relief operations. According to the Commission, the six companies allegedly misrepresented that they would lower distressed homeowners’ mortgage payments and interest rates, or prevent foreclosure, while illegally charging advance fees. Along with the complaints, the FTC sought orders stopping the alleged illegal practices and asset freezes pending the conclusion of litigation.

According to the complaints, the FTC alleged that each of the mortgage relief operations violated the FTC Act and the Mortgage Assistance Relief Services (MARS) rule, known as Regulation O. Under the MARS rule, mortgage foreclosure rescue and loan modification services may not collect fees until a homeowner receives an acceptable written offer from their lender or servicer. The companies allegedly violated the rule by charging upfront fees ranging from $495 to $4,000, or monthly fees ranging from an average $399 to $500. Homeowners were rarely provided with the mortgage relief promised by the various companies, but the schemes pocketed large revenues. One of the schemes, allegedly run by Philip Danielson, LLC, collected over $35 million from distressed homeowners, but the company “provided little, if any, meaningful assistance to modify or prevent foreclosure,” the complaint stated.

“Mortgage relief schemes like these target people who are already having financial problems and, all too often, inflict even further harm on them,” stated FTC Bureau of Consumer Protection Director Jessica Rich. “We’re determined to stop operations that illegally charge up-front mortgage relief fees or make empty mortgage relief promises.”

The six companies facing charges are: CD Capital Investments, LLC (FTC v. CD Capital Investments, LLC, File No. 132 3289, Case No. 8:14-cv-01033-JLS-RNB); Mortgage Relief Advocates LLC (FTC v. Mortgage Relief Advocates LLC, File No. 142 3067, Case No. 2:14-cv-05434-MWF-AGR); Home Relief Foundation, Inc. (FTC v. Home Relief Foundation, Inc., File No. 132 3266, Case No. 1:14-cv-00652); Lanier Law, LLC (FTC v. Lanier Law, LLC, File No. 142 3038, Case No. 3:14-cv-00786-MMH-PDB); FMC Counseling Services, Inc. (FTC v. FMC Counseling Services, Inc., File No. 142 3052, Case No. 0:14-cv-61545-WJZ); and Philip Danielson, LLC (FTC v. Philip Danielson, LLC, File No. 132 3240, Case No. 2:14-cv-00896-GMN-VCF).

Since 2008, the FTC has filed 48 actions against companies that peddled fraudulent mortgage relief schemes. “These law enforcement actions have helped tens of thousands of consumers who were victims of these scams, and have prevented tens of thousands more from becoming victims,” the Commission said.

Companies: CD Capital Investments, LLC; Mortgage Relief Advocates LLC; Home Relief Foundation, Inc.; Lanier Law, LLC; FMC Counseling Services, Inc.; Philip Danielson, LLC

News: ConsumerProtection