CFPB and FTC Target Fraudulent Mortgage Relief Operations
The Federal Trade Commission (FTC) has taken action against six mortgage relief operations charging that defendants 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. In each case, the FTC has sought an order stopping the illegal practices and freezing the defendants' assets pending the outcome of the litigation. The FTC's actions are part of a joint federal and state enforcement sweep, Operation Mis-Modification, with the Consumer Financial Protection Bureau (CFPB), which brought charges against three other mortgage relief operations, as well as 15 state attorneys general and other state agencies, which announced 32 similar actions. "Mortgage relief schemes like these target people who are already having financial problems and, all too often, inflict even further harm on them," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "We're determined to stop operations that illegally charge up-front mortgage relief fees or make empty mortgage relief promises." In today's announced actions, the FTC has charged the defendants in each operation 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 services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. “We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. “These companies pocketed illegal fees—taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible.” Including the six cases announced today, the FTC has brought 48 actions against companies peddling fraudulent mortgage relief schemes since 2008. 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.