U.S. files lawsuits against foreclosure relief firms
WASHINGTON – July 24, 2014 – The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and 15 states, including Florida, announced a sweep against foreclosure relief scammers that used deceptive marketing tactics to rip off distressed owners.
CFPB says it's filing three lawsuits against companies and individuals that collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages. The CFPB is seeking compensation for victims, civil fines and injunctions against the scammers.
Separately, the FTC is filing 6 lawsuits, and the states are taking 32 actions.
In Florida, Attorney General Pam Bondi and CFPB obtained an emergency temporary restraining order and appointment of a receiver in a joint lawsuit filed against Florida-based Hoffman Law Group (HLG) and related entities. The order prohibits HLG defendants from doing business with consumers and freezes HLG's bank accounts.
Based in North Palm Beach, HLG and its affiliates allegedly received millions of dollars from distressed homeowners across the country, typically charging $6,000 per homeowner to sign up along with additional monthly payments of $500. HLG promised homeowners financial relief in the form of mortgage debt forgiveness, loan modifications and other foreclosure-related relief, and cash payments through participation in mass-joinder lawsuits that HLG was filing against numerous mortgage lenders across the country.
The lawsuit against HLG claims it violated the federal Mortgage Assistance Relief Services Rule (MARS) and state laws by collecting upfront fees before obtaining a loan modification, misrepresenting to consumers the services and relief they would receive, failing to make disclosures required by law, and other violations.
"Florida's distressed homeowners should not have to worry about being swindled by scammers who hide behind law firms to try to avoid the MARS Rule," says Bondi.
"We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure," adds CFPB Director Richard Cordray. "These companies pocketed illegal fees – taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible."
Mass joinder scams
Mass joinder scams, such as the one alleged in this lawsuit, are essentially foreclosure rescue scams, Bondi's office says in a release. Telemarketers tell homeowners that if they join in a lawsuit with multiple plaintiffs, lenders will be induced to pay large cash payments and provide extensive mortgage relief to each homeowner to settle the case.
Mass joinder scams often claim to have an attorney on staff to represent each homeowner; but, in truth, that attorney is likely not reviewing the facts of each homeowner's claim, is not directly handling the litigation that may be filed, and often is not even licensed to practice in the homeowner's state.
HLG and its entities are also facing charges of unfair and deceptive trade practices and civil theft. Bondi and CFPB obtained an emergency court order on July 16 appointing a receiver to control HLG and related entities.
To access the receiver's website, visit Bernet-Receiver.com.
Other lawsuits filed by CFPB include:
• Clausen & Cobb Management Company and owners Alfred Clausen and Joshua Cobb, as well as Stephen Siringoringo and his Siringoringo Law Firm. The Bureau filed its complaint against three individuals for allegedly charging homeowners illegal advance fees for mortgage loan modifications. Their operation 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, LLP, the Consumer First Legal Group, LLC, and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford. The CFPB alleges that the firm took in over $19.2 million in fees from over 10,000 distressed homeowners nationwide, with most, if not all, of that money coming from illegal advance fees for so-called loan modification services. Both TMLG and CFLG have ceased operations, but the CFPB is seeking redress for consumers harmed by their practices and permanent injunctive relief against the principals© 2014 Florida Realtors®