Consumer Finance Insights
March 2, 2017

FTC Settles with Remaining Defendant in Alleged Mortgage Scam Case

On February 21, 2017, the United States District Court for the Central District of California issued a stipulated order as to the final defendant in an alleged mortgage-relief scam.  The court had entered judgment against the other co-defendants in the case, Federal Trade Comm’n v. CD Capital Investments, LLC, No. SACV14-01033 (C.D. Cal.), in August 2016.

In the case, the Federal Trade Commission (FTC) had filed a complaint alleging that the stipulating defendant (an individual named Gabriel Stewart) and his co-defendants (two individuals and three companies) had violated the law by (1) falsely representing that they could help homeowners reduce their mortgage payments or avoid foreclosure; (2) falsely representing that they were affiliated with a government agency or with homeowners’ mortgage lenders or servicers; and (3) illegally charging advanced fees.  The complaint claimed that these actions violated the FTC Act and the Mortgage Assistance Relief Services Rule (known as the MARS Rule).

The stipulated order entered on February 21st permanently enjoins the defendant from (1) conducting any business related to mortgages or debt relief, and (2) making misrepresentations regarding financial products and services as well as other products and services.  The order also imposes a monetary judgment in the amount of $1,784,864 against the stipulating defendant and his co-defendants, though it only requires the stipulating defendant to pay $105,487 (the money he received from the alleged scam) of that total as long as he did not misrepresent the state of his finances to the court.

The order serves as an important reminder that that the government takes seriously any misrepresentations regarding mortgage lending services and will impose hefty sanctions for noncompliance with mortgage servicing regulations designed to protect consumers.

The FTC press release is available here.

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