by James Limbach
ConsumerAffairs.com
June 1, 2010
The Federal Trade Commission (FTC) has named several new defendants and added new charges concerning so-called "forensic audits" to its lawsuit against an operation that allegedly bilked homeowners who were trying to lower their mortgage payments.
The action is part of a continuing crackdown on scams that target consumers who are behind in their mortgage payments or at risk of foreclosure.
The FTC has added as defendants Bradford R. Geisen; Maurice Jackson; Patrick Butler; Credit Services Alliance Inc.; and CreditLawGroup, a law firm run by two of the original defendants, John W. Smith and Glenn E. Gromann. The original defendants also included The Debt Advocacy Center LLC; Smith, Gromann & Davidson P.A.; and Kevin McCormick.
Questionable ads
According to the FTC's amended complaint, the new defendants, along with Smith and Gromann, offered "forensic audits" -- checking a homeowner's loan documents for law violations that would give them leverage in negotiating with lenders to obtain a loan modification or a "short sale" (sale of a house for an amount less than the mortgage balance).
Their ads stated, "We have found that between 80-90 percent of all loans that we have audited have some form of rights violations." They collected $995 in advance for each audit even though an audit was unlikely to assist in negotiations with lenders, the complaint alleges.
Jack of San Jose, CA, had an unpleasant experience with a forensic audit. "The Mortgage Relief Law Center (MRLC) company cashed my check of $2,795.00 even thought they already know that our application is not qualified at the beginning," he wrote in a complaint to ConsumerAffairs.com. "They knew that we would not able to qualify, but never informed us and let us wait for six months without any status result from the mortgage company.
Finally, after almost seven months hoping, we received a letter from our mortgage company (CitiMortgage), which states that we are not qualified for a loan modification." MRLC, he says, refused his request for a refund.
Variety of charges
The FTC charged the new defendants, and Smith and Gromann, with falsely claiming that as a result of forensic loan audits consumers would obtain completed short sales or loan modifications that would make their mortgage payments substantially more affordable. They are also charged with telemarketing without paying the required annual fee to access telephone numbers on the National Do Not Call Registry.
The FTC's original complaint, filed in November 2009, contended that The Debt Advocacy Center, operated by several individuals, charged customers $1,500 based on the alleged false promise that it would get homeowners' loans modified to make their mortgage payments more affordable.
The FTC says that defendants falsely claimed they had helped more than 90 percent of their clients, and that they would refund consumers' money or pay a penalty if they failed. They are also charged with debiting consumers' bank accounts or charging their credit cards without their consent. The court halted the operations and froze the defendants' assets, pending resolution of the case.
