The Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and 15 states have taken legal action against companies who allegedly deceived vulnerable homeowners nationwide through employing deceptive marketing tactics.
The CFPB issued three lawsuits against companies that the agency says say collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
The companies allegedly obtained clients through deceptive marketing, including inflated inflated success rates, and false promises of legal advice.
“Then, the companies illegally required consumers to pay upfront fees to begin the mortgage modification process,” said CFPB Deputy Director Steve Antonakes, in a news release. “Often, consumers never received loan modifications and were left worse off than they began.”
The lawsuits are part of the CFPB’s ongoing efforts to hold companies who took advantage of vulnerable homeowners accountable.
The FTC charged six mortgage relief operations for allegedly preying on distressed homeowners by misrepresenting that they typically could lower homeowners’ mortgage payments and interest rates or prevent foreclosure, and illegally charging advance fees. In each case, the FTC has sought an order stopping the illegal practices and freezing the defendants’ assets pending the outcome of the litigation.
One of the lawsuits filed by the CFPB was against Clausen & Cobb Management Company, Inc., its owners, Alfred Clausen and Joshua Cobb, and their business associate, attorney Stephen Siringoringo. Their joint operation allegedly charged initial fees ranging from $1,995 to $3,500, in addition to monthly fees of $495, to thousands of California homeowners in distress.
The Mortgage Law Group (TMLG), the Consumer First Legal Group, and their principals Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford are named in the second lawsuit. CFPB alleges that the two groups took in over $19.2 million in fees from distressed homeowners nationwide in a two-year period.
The third lawsuit was filed against the Hoffman Law Group. Since April 2012, the Hoffman Law Group enterprise has allegedly accepted millions of dollars in illegal advance fees, which begin with an upfront fee of $6,000 and a $495 monthly maintenance fee thereafter.
“Because the enterprise’s conduct was ongoing and we believed consumers were going to be harmed, we sought and received a court order appointing a receiver to take over the enterprise’s operations, freezing their assets, and prohibiting the illegal conduct,” Antonakes says.
The CFPB released materials to help consumers recognize the red flags of mortgage relief scams Wednesday.
“The lawsuits announced today aim to stop companies from engaging in practices that not only violate the law but take advantage of distressed homeowners who are just trying to find a way to pay their bills,” Antonakes says. “Companies should know better and consumers deserve better.”
Written by Cassandra Dowell