The Federal Trade Commission has reached settlements with eight marketers it says charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes.
The settlements in three separate actions are part of the FTC's ongoing efforts against scams that target financially distressed consumers. The eight marketers have been banned from marketing these services in the future and one, Federal Loan Modification Law Center, has been fined $11.5 million.
According to the FTC complaint, the Federal Loan Modification Center sold a so-called "Federal Loan Modification program." They charged up to $3,000, much of which they required up-front, but Federal Loan Modification often failed to live up to the promised results, according to the FTC's complaint, and homeowners complaining to ConsumerAffairs.com.
"This company ripped me off me for $3000.00 for a loan modification, Jean of Buford, Ga., told ConsumerAffairs.com in April. "I lost my house and now I'm homeless."
The settlement order against owner Steven Oscherowitz permanently bans him from selling mortgage relief services and from telemarketing any good or service. Under the order, Oscherowitz also is prohibited from misrepresenting any good or service, selling or otherwise benefiting from customers' personal information, and failing to dispose of customer information properly.
$11.5 million judgment
The order imposes an $11.5 million judgment against Oscherowitz, which represents the amount consumers paid to the defendants while he was involved in the alleged scheme. Any money collected to satisfy the judgment will be paid to injured consumers if practicable, the FTC said.
The settlement also includes Hope Now Modifications, which the FTC said falsely claimed that they could obtain mortgage loan modifications in all or virtually all cases and would refund consumers' money if they failed. The company allegedly told consumers that they were affiliated with, or part of, the HOPE NOW Alliance, a free federal homeowner assistance program.
Raymond, of College Park, Ga., said he talked to Hope Now in October 2008 about helping him modify his loan. He was told to send payments of $500 and $750 and said he was promised a refund if modification efforts failed.
"I haven't heard from them since December 2008," Raymond told ConsumerAffairs.com. "I am about to go through a divorce and file for bankruptcy. My life is upside down since that ordeal."
Raymond just might get his money back. The order also imposes a judgment of almost $5.3 million, which will be suspended when the defendants surrender all of the funds in their bank accounts, which were frozen by the court.
Loss Mitigation Services, Inc. (LMS) and Synergy Financial Management Corporation, doing business as Direct Lender or DirectLender.com (Direct Lender), also allegedly misrepresented that the companies were a department of, or affiliated with, the consumer's lender or mortgage servicer.
Promised refunds
In addition, the agency says the owners falsely claimed that consumers would receive refunds if LMS or Direct Lender failed to secure a loan modification. In many cases, the defendants failed to obtain loan modifications for consumers, and some consumers lost their homes while waiting for the promised results.
I got a letter (from Loss Mitigation Services) saying that I could qualify for a loan modification," Devin, of Thousand Oaks, Calif., told ConsumerAffairs.com. "When I called I was told they have a money back guarantee, if they didn't get my loan modified within 6 months. I paid $3600 and it's been six months, I can't get anyone on the phone and nothing has been done to modify my loan. I feel they are scammers."
Under the settlement orders, Loss Mitigation Service's owners are banned from selling mortgage relief services. The orders also impose a $6.2 million judgment that is suspended due to their inability to pay.
