Florida Sues Two Mortgage Rescue Firms

MGD Management, LLC, and CRS Marketing, LLC, both with offices in Broward County, Fla., market "strategic default" services which purported to keep the consumers in their homes "for free" for three years without paying the mortgage, taxing authorities, homeowners association, or home owners insurance.

It's another wrinkle in the growing industry of “mortgage rescue,” where companies say they can help homeowners stave off foreclosure. Florida Attorney General Pam Bondi isn't buying it. She's filed suit against both firms and has obtained a temportary injunction and limited asset freeze.

“These companies preyed on Florida’s distressed homeowners who were already experiencing financial hardships,” Bondi said. “The laws that protect Floridians from deceptive practices and homeowners during the course of a residential foreclosure must be abided by, and I am pleased that the Court granted our motion to stop these companies from defrauding Floridians.”

Empty promises

According to the complaint, the companies:

• promised assistance with the defense of their foreclosure action and represented that the fees paid to the defendants included all legal fees other than bankruptcy filings;
• advised consumers to ignore any communication from their lenders/creditors unless it came registered mail; and
• failed to provide legal services.

Bondi said the Broward County Circuit Court issued a temporary injunction barring the company and its principal, Mark Dalen, from marketing, advertising or providing foreclosure-related rescue services until further order of the Court. Additionally, the Court granted a limited asset freeze on the bank accounts of the companies at issue.

Increasingly, the states have taken on the role of policing companies in this industry. Illinois, Indiana and several other states have mounted multiple prosecutions in the last three years. Presumably, the newly constituted Consumer Financial Protection Buruea, whose director, Richard Cordray, was installed by President Obama this week in a recess appointment, will also take on that role.