Feds Target Multiple Mortgage Relief Scams

mortgage relief scamA rogue's gallery of more than a dozen mortgage relief scammers have been charged with deceiving desperate homeowners in a string of separate crackdowns by the Federal Trade Commission.

These law enforcement actions represent the latest fruits of the FTC's ongoing onslaught against scams targeting homeowners who've fallen behind in their mortgage payments or face foreclosure.As a result, the FTC has shut down two bogus mortgage relief operations that posed as government mortgage assistance programs and banned 17 marketers from selling mortgage loan modification and foreclosure relief services. The agency also charged another mortgage relief operation with contempt for violating court orders.

Each case involves false claims by defendants who promised consumers they could obtain dramatically lower mortgage interest rates in exchange for hefty up-front fees, a practice now outlawed under new FTC rules.

"We're serious about stopping con artists who prey upon financially distressed homeowners, and we'll be bringing more of these cases," FTC Chairman Jon Leibowitz said in a statement.. "If you're worried about keeping your home, avoid anyone who wants a large fee in advance, guarantees they'll modify a loan or stop foreclosure, or tells you to stop making mortgage payments and pay them instead."

What follows are FTC complaints, settlements, judgments and contempt actions against eight mortgage relief operations that took advantage of consumers seeking mortgage relief.

Complaints

Residential Relief Foundation: The FTC has accused the Residential Relief Foundation of falsely claiming their loan modification program would result in waiver of late payments, late fees and legal fees; conversion of adjustable rates to fixed rates as low as 1%; reduction of principal balance; and up to 40% lower mortgage payments.

They defendants used a logo similar to the Great Seal of the United States and told consumers that it's nearly impossible for homeowners to obtain mortgage modifications themselves. Claiming quick results and a high success rate, the defendants charged a $1,495 up-front fee, advised people to stop making mortgage payments, and claimed that reports they created would enable them to obtain the promised results, according to the FTC's complaint.

The defendants also disposed of consumers' personal information in unsecured dumpsters. In addition, when marketing debt relief services for credit card debt, the defendants lied to consumers, promising they could become debt free in 12 to 36 months, remove late fees and penalties and reduce debts up to 50%.

At the FTC's request, a federal court has shut down the operation and frozen the defendants' assets, pending trial. The defendants are Residential Relief Foundation Inc., Silver Lining Services LLC, Mitigation America LLC, Michael Valenti, and Bryan J. Melanson, Jillian N. Melanson, Dennis Strzegowski and James W. Holderness, also doing business as the Law Office of James Holderness.

U.S. Homeowners Relief: U.S. Homeowners Relief, which the FTC says claimed U.S. government affiliation, included four companies and six individuals promoting a "Government Mortgage Relief Program" they claimed would reduce mortgage payments as part of the "Obama Act" or the "federal stimulus program."

The operation, which claimed a 90% or higher success rate, promised to reduce consumers' monthly mortgage payments and lower their interest rates and principal amounts, in return for a fee of up to $4,250. The defendants also promised to give full refunds if they failed to obtain loan modifications.

The FTC complaint alleged that once consumers paid the fee, they received nothing in return and weren't refunded. Further, the defendants stopped responding to their calls or emails, disconnected their phone numbers, changed the name of their business and continued to prey on other consumers.

A federal court halted the operation and froze the defendants' assets, pending trial. The defendants include U.S. Homeowners Relief Inc.; Waypoint Law Group Inc.; American Lending Review Inc.; New Life Solutions Inc.; D.G.C. Consulting LLC; DLD Consulting LLC; Samuel Paul Bain; Macie Mejeco Bain, also known as Macie Mejeco Manns; Aminullah Sarpas, also known as Amin Sarpas and David Sarpas; and Damon Grant Carriger.

Settlements

The FTC also reached settlements with several defendants charged with unlawful practices in 2009. In addition to banning the defendants from the mortgage relief business, the settlement orders permanently bar them from misleading consumers about goods and services, which includes false claims about any government affiliation, misrepresenting loan or refund terms and misrepresenting their ability to improve someone's credit history. The defendants are also banned from selling or disclosing customers' personal information.

The defendants are as follows:
  • National Foreclosure Relief - David Ealy and Hugo Tapia have settled charges that they falsely claimed their "Fresh Start Program" would stop foreclosure or they would fully refund consumers' money, and will surrender all funds in bank accounts frozen by the court.
  • U.S. Foreclosure Relief - Attorney Brandon Moreno and his law firm, Cresidis Legal, have settled charges that they falsely claimed they would obtain loan modifications for consumers or refund their money, that a lawyer would negotiate the terms of consumers' home loans with lenders, and that they successfully obtained modifications for at least 85% of their clients. More than $614,000 obtained from the eight settling defendants in this matter will be returned to 995 consumers.
  • Federal Housing Modification Department, Inc. - Michael Trap, Glenn Rosofsky, and Bryan Rosenberg have settled FTC charges that they misrepresented themselves as a federal government agency or affiliate and falsely claimed that, in return for a $3,000 fee, they would get lenders to modify consumers' mortgages, substantially lowering their loan payments in virtually every instance. Rosofsky and Trap also have pleaded guilty to federal criminal conspiracy and money laundering charges.
  • Crowder Law Group - This operation, formerly known as Jackson, Crowder & Associates, PA, and doing business as Legal Support Services; Optimum Business Solutions LLC, also known as Attorney Finance Services LLC and doing business as Attorney Finance Services; Bruce Meltzer; and Kathleen Lewis, also doing business as Kathy Lewis, have settled charges that they misrepresented themselves as a federal government agency or affiliate and charged a $2,000 up-front fee for services they did not perform.
The FTC also announced a court judgment against Dinamica Financiera, which lied to Spanish-speaking consumers behind on their mortgage payments, promising it would stop foreclosure or obtain mortgage loan modifications. Penalties included a $3.7 million fine against against Dinamica Financiera LLC, Valentin Benitez, and Jose Mario Esquer; a $1.3 million fine against Soluciones Dinamicas, Inc., Valentin Benitez, and Jose Mario Esquer; and a $394,000 fine against Oficinas Legales de Eric-Douglas Johnson, Inc., Valentin Benitez and Eric Douglas Johnson.

Finally, the FTC filed a civil contempt action against Everard Taylor, Elias Taylor, Ebony Taylor and Nationwide Financial Aid and Northern Federal Aid for misleading consumers with foreclosure rescue claims in violation of previous court orders.

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