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Government moves against so-called mortgage relief companies

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Does Bankruptcy stop foreclosure?”

 

Having trouble paying your mortgage? If you plan to take up one of many so-called mortgage relief outfits advertising on television, radio and online, watch out. The Federal Trade Commission, Consumer Financial Protection Bureau and state agencies are cracking down on companies that promise big results—while taking big bucks from distressed homeowners—but fail to deliver.

Home Auction Sign Charlotte Mecklenburg County Bankruptcy Lawyer North Carolina Debt AttorneyThe FTC has alleged that at least six different mortgage relief companies misrepresented their ability to lower payments or secure loan modifications for homeowners, and charged illegal, upfront fees of up to $4,000. The agency has moved to enjoin the activities of the companies and has frozen their assets pending the outcome of litigation.

The largest target of the FTC action was the Utah-based Danielson Law Group, which took some $35 million from distressed homeowners, the agency alleged. That company allegedly told consumers it had a more-than-90-percent success rate, promising that attorneys could successfully negotiate loan modifications that would reduce mortgage payments.

Two Florida-based companies, two California-based companies, and one company based in Texas were also targeted by the FTC. The Texas company—Home Relief Foundation—actually instructed homeowners to stop making their mortgage payments, without telling them that their failure to make payments could lead to foreclosure, damage their credit and, potentially, land them in bankruptcy, the agency alleged. Home Relief collected some $500,000 from distressed homeowners over a three-year period.

California-based CD Capital Investments charged homeowners an up-front $495 application-processing fee, as well as a $399 monthly application-monitoring fee, the agency alleged. It also bragged that it was affiliated with the Obama Administration’s “Making Home Affordable Program” and various other state and federal foreclosure relief programs. It wasn’t.

Each of the companies are alleged to have made false promises to homeowners based on alleged affiliations or relationships with insiders in lending and government institutions. One company—Mortgage Relief Advocates—bragged that its forensic loan audit would uncover Truth-in-Lending Act violations in 80-percent of cases. These violations, the company said, could be used as leverage to stave of foreclosure and seek a reduction in monthly mortgage payments.

Many of the companies violated the Mortgage Assistance Relief Services (MARS) Rule, known as “Regulation O.” That rule—issued by the FTC in 2010—prohibits mortgage relief companies from collecting fees until after they have provided homeowners with a written offer from their lender or servicer that is acceptable to the homeowner.

The FTC and CFPB—the Consumer Financial Protection Bureau—passed a flurry of new regulations in the wake of the Great Recession. These were designed to assist and protect distressed homeowners and consumers. Indeed, the CFPB itself was created by the Dodd-Frank Act, which marked its fourth anniversary this past Monday. According to the New York Times, observers disagree on the effectiveness of the Act and whether actions taken by regulators will prevent another financial crisis from occurring.

In any case, distressed homeowners and consumers who are ripped off by companies that claim to help and do the opposite now have some powerful allies.

If you find yourself in financial straits and are in need of a powerful ally who, at the very least, can provide you with some direction as to how to deliver yourself from debt, please call me today to set up a consultation. The skilled lawyers at Arnold & Smith, PLLC are here to assist you. Please give me a call find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://www.ftc.gov/news-events/press-releases/2014/07/federal-state-agencies-stop-phony-mortgage-relief-schemes

http://www.ftc.gov/news-events/press-releases/2010/11/ftc-issues-final-rule-protect-struggling-homeowners-mortgage

http://www.nytimes.com/2014/07/22/opinion/Joe-Nocera-Did-Dodd-Frank-Work.html?_r=0

 

 

Image Credit:

http://upload.wikimedia.org/wikipedia/commons/8/8f/Foreclosedhome.JPG

 

 

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http://www.youtube.com/user/ArnoldSmithPLLC?feature=watch

 

 

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