The Federal Trade Commission (“FTC”) has reported a growing problem with scams involving purported rescue plans for home owners facing foreclosure. The FTC brought 11 cases targeting mortgage foreclosure rescue and loan modification scams within the last year and is actively involved in ongoing investigations. Additionally, the FTC has sent warning letters to 71 companies for marketing potentially deceptive mortgage loan modification and foreclosure assistance programs, and for falsely appearing to be affiliated with a non-profit or government entity or endorsed by government officials. For example, the FTC recently filed a complaint against the Federal Loan Modification Law Center, LLP for allegedly misrepresenting that they were a part of, or affiliated with, the federal government and that consumers could obtain a loan modification in virtually all instances.
The FTC also recently settled charges against two individuals that they violated federal law and a previous court order by luring homeowners into high-cost, short term loans secured by an additional mortgage on their homes. The FTC sued them and 7 other defendants as part of an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure. The FTC complaint alleges that the defendants violated the Home Ownership and Equity Protection Act by extending credit based on the value of consumers’ collateral without regard to their repayment ability, by requiring balloon payments after only 6 months, by providing negatively amortized loans that cause consumers to owe more at the end of the loan than at the beginning, and by failing to make required disclosures. The defendants also allegedly violated the Truth in Lending Act (TILA) by grossly understating the loan’s annual percentage rate (APR) and finance charges. Moreover, the complaint alleges that the defendants violated TILA by failing to make timely written disclosures and failing to accurately disclose the amount being financed, the finance charge, the APR, the payment schedule, the total payment amount and the fact that the creditor has or will acquire a security interest in the consumer’s home.
If you are a victim of a mortgage foreclosure rescue scam, please contact us to discuss your legal options.