CFPB Cracks Down on Two Mortgage Scams, Targets Marketing

Several operations that falsely promised distressed mortgage assistance have come under fire from the Consumer Financial Protection Bureau (CFPB) for scamming homeowners out of thousands of dollars, and for some, their homes.

The fraudulent operations gained more than $10 million by charging consumers for false services, and were found by the CFPB to be in violation of the Dodd-Frank Act and Regulation O, formerly known as the Mortgage Assistance Relief Services Rule, the CFPB reported Tuesday. 

The parties under investigation, the Gordon Law Firm and the National Legal Help Center, disguised themselves with fake government seals, logos, letterheads to ensnare consumers, the CFPB finds. Using deceptive language, these companies misled consumers to believe they were sponsored with government agencies or programs.

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Both firms allegedly requested upfront fees before services were provided, ranging from $1,000-$4,000 for services that never materialized. Additionally, they instructed consumers to stop paying their mortgages and stop contacting their lenders with the false promise that the offending companies would provide relief.

After making thousands of dollars in the scams, the defendants allegedly stopped returning phone calls and emails to disgruntled consumers, the CFPB notes. 

Marketing was believed to be a key issue for CFPB’s crackdown into mortgage scams, as just last month the agency launched 19 investigations as a result of advertising violations.  

“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. “We are especially concerned with those who misrepresent government programs or websites to diver distressed homeowners from needed assistance.”

Written by Jason Oliva

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