The Federal Trade Commission has sued three companies, alleging that they have cheated homeowners out of millions of dollars by falsely claiming that they could save troubled homeowners from foreclosure. The suits, which seek to immediately shut down the companies, are part of the “distressed homeowner initiative,” which is a federal effort to halt predatory home rescue, mortgage modification, short-sale and bankruptcy frauds that target financially struggling homeowners.
Since 2008, the FTC has brought more than 40 cases under the initiative. According to the agency, it has saved hundreds of millions of dollars in bogus charges as a result. The FTC, which is charged with enforcing fraud and false advertising laws, also passed a new rule in 2010 that banned mortgage foreclosure rescue and loan modification companies from collecting fees until homeowners had received written proof that their lender was willing to provide the requested relief. FTC Chairman Jon Leibowitz said that with many homeowners still struggling to hold onto their homes, the FTC is taking “a hard line against con artists who are seeking their next victim.”
In all three cases, the FTC charged that the 3 companies peddled bogus mortgage relief schemes in violation of the FTC Act and the Mortgage Assistance Relief Services rule, which ban advance payment for mortgage relief services. The companies named as Defendants do business under dozens of corporate aliases, including Prime Legal Plans, Consumer Legal Plans, (also known as Reaching U Network and American Legal Plans) American Mortgage Consulting Group, (also known as Home Guardian Management Solutions), Expense Management America and New Life Financial Solutions. The FTC alleges that while the mortgage scams were similar, they all followed somewhat different paths. All of these companies were taking advantage of folks who needed help – who trusted them – and who were cheated. Fortunately, each of these companies was caught and action taken against them.
Source: CBS News
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