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FTC Takes On Mortgage 'Rescue' Operations

Agency sues two businesses for fraud, charges others with false claims

By Martin H. Bosworth
ConsumerAffairs.com

March 2, 2008

States has been aggressively pursuing the con artists and now the the Federal Trade Commission (FTC) has taken action, suing two businesses for deceptive marketing, and charging several others with violating federal truth-in-lending laws.

On February 28, the FTC charged six businesses and three individuals with violating the Home Ownership and Equity Protection Act (HOEPA) and the Truth-In-Lending Act (TILA) by tricking customers into taking out secondary mortgages on their homes with grossly inflated interest rates, and failing to disclose the true terms of the loans and rates.

In one case, the stated Annual Percentage Rate (APR) was 28 percent, but the actual APR was well over 100 percent.

The defendants in the FTC complaint are Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC, Silverstone Financial, LLC, Southeast Advertising, Inc., Keystone Financial, LLC, MT25 LLC, Peter J. Porcelli II, Bonnie A. Harris, and Christopher Tomasulo. "The FTC will seek to bar the defendants from further violations, make them forfeit their ill-gotten gains, and stop collection and foreclosure actions or efforts to seize or transfer properties," the agency said.

'No solution'

On February 29, the FTC filed two lawsuits against six more business and two individuals for claiming that they could completely stop foreclosure proceedings.

In both cases, the businesses were charged with taking thousands of dollars from consumers in initial consultations, and failing to follow up or even respond to customers' calls afterwards. The first complaint targets Florida-based Mortgage Foreclosure Solutions, Debra Behrens, and Michael Siani, who operated numerous Web sites and blogs, such as www.mortgageforeclosuresolutions.biz, www.mortgageforeclosuresolutions.com, www.mortgageforeclosuresolutions.info, www.mortgageforeclosuresolutions.net, www.mortgageforeclosuresolutions.org, and www.mortgageforeclosuresolutions.us.

"Defendants promise consumers that Defendants will immediately begin negotiating with the lender and provide a solution to save their home from foreclosure," the FTC said in its complaint.

"Defendants then require consumers to pay an advanced fee of $950 and a $250 processing setup charge for their mortgage foreclosure rescue services. Consumers who express reservations about paying $1,200 in advance are assured by Defendants that their services are guaranteed."

"After consumers have paid MFS for the mortgage foreclosure rescue services, Defendants often do not provide updates concerning the foreclosure proceedings or return consumers' telephone calls. In other instances, when consumers do reach Defendants' representatives, consumers are told either that Defendants are working on a solution or that no solution can be found," the agency said.

Also sued by the FTC were National Financial Solutions, LLC, National Hometeam Solutions, LLC, United Financial Solutions, LLC, Nationwide Foreclosure Services, LLC, Evalan Services, LLC, Elant, LLC, Elias H. Taylor aka Eli Taylor, Everard Taylor aka Everardo Taylor, Emanuel Taylor, and Edwin P. Taylor, Sr. aka Ed Taylor.

The complaint alleges that the Taylors' companies had made statements that their service can stop foreclosure with respect to specific consumers' homes; that their service provides options to prevent foreclosure other than filing for bankruptcy; that they have inside contacts with particular lenders; that they will negotiate with lenders; and that they have helped numerous homeowners stop their foreclosures."

After consultations where they charged customers a fee ranging from $500 to $1,200 in advance for their help, the defendants "ensured failure for their clients by not taking any of the actions they had promised – such as contacting the lender or re-negotiating the loan – or taking only minimal steps that were not calculated to prevent foreclosure."

In addition to the FTC, many states have geared up to prosecute fraudulent "mortgage rescue" companies. Operations in North Carolina,, New Jersey, and Illinois have been targeted for falsely claiming they can stop foreclosure proceedings.

What to do

For more information, read Fred Yager's tips for avoiding foreclosure and mortgage rescue scams.

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