By James Limbach
ConsumerAffairs.com
September 18, 2009
The Federal Trade Commission has brought two new law enforcement actions in its continuing crackdown on mortgage foreclosure rescue and loan modification scams.
"Today's challenging economy presents an opportunity for con artists who prey upon financially distressed consumers," said FTC Chairman Jon Leibowitz. "If you're worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they'll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead."
In the latest FTC actions, the defendants are accused of falsely claiming that they would obtain a mortgage modification in virtually all cases. According to the FTC's complaints, after charging homeowners large up-front fees, the defendants often did little or nothing to help them renegotiate their mortgages or stop foreclosure. The FTC seeks to stop the defendants' deceptive claims and make them forfeit their ill-gotten gains.
Nations Housing Modification Center and its principals allegedly violated the FTC Act and the FTC's Telemarketing Sales Rule by misrepresenting themselves as a federal government agency or affiliate and falsely claiming that, in return for a $3,000 fee -- half due up-front and half due two weeks later -- they would obtain mortgage modifications that would make consumers' loan payments substantially more affordable in virtually every instance.
According to the FTC, HMC also falsely claimed a 90 percent success rate, that only selected customers meeting certain qualifications were offered a loan, and that they had attorneys and forensic accountants on staff. In fact, the FTC says very few homeowners got modifications, the defendants accepted advance fees for services from all applicants, and they had neither lawyers nor accountants on staff.
The defendants are Federal Housing Modification Department, Inc., doing business as Nations Housing Modification Center and Loan Modification Reform Association, and Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg.
Infinity Group Services and its president are charged with violating the FTC Act by falsely representing that they would obtain a loan modification in all, or virtually all, instances; that they would give full refunds if they failed to do so; and that they would obtain loan refinancing for an up-front fee of $995.
According to the FTC's complaint, the IGS radio ads and Web site urged consumers to call a toll-free number. Once consumers called, the defendants' sales personnel promised that, in return for the up-front fee, the company would help them modify their mortgage loans through the Department of Housing and Urban Development's Hope for Homeowners program. The defendants claimed a high success rate and offered a full refund if they failed.
The FTC counters that the company often failed to obtain loan modifications and either failed to answer or return consumers' telephone calls or update them about their status. When consumers were able to contact the defendants, they were falsely told that negotiations were proceeding smoothly or that lenders had caused a delay. In many instances, consumers received refunds only after repeatedly complaining to the FTC, the California Attorney General's Office, or the Better Business Bureau.
The FTC's complaint further states that the defendants also offered mortgage loan refinancing for a "flat fee" of $995 but then sought additional fees ranging from $2,000 to $15,000. In other instances, consumers were led to believe that they had closed on their loans but were later told by the defendants that the loan would not be funded. According to the complaint, the defendants' Web site stated that there were no hidden costs, but a fine-print footnote stated, "Rates, Fees and Terms are subject to change."
The defendants are Infinity Group Services, also doing business as IGS, Hope to Homeowners, ASK IGS, and ASK IGS, Inc., and the company's president, Kahram Zamani.
