The FTC announced that it has settled with defendants allegedly involved in a mortgage foreclosure audit scam. According to the FTC’s complaint, defendants—a company and its owner and two other related companies— charged consumers $1,995 to perform a forensic audit that allegedly would uncover defects (e.g., lost notes) that could invalidate the mortgage or assist in negotiating reduced mortgage terms or loan modifications. However, defendants allegedly either failed to follow up with or contact lenders, and also failed to return consumers’ calls and emails requesting an update on their loan modifications. Defendants are alleged to have violated the FTC Act and the Mortgage Assistance Relief Services Rule by misrepresenting that they could reduce mortgage payments, and that if their efforts failed, they would return the money.
The settlement order prohibits defendants from making misleading claims about financial products or services or any other type of product or service and from marketing mortgage assistance relief or other debt relief products or services. The order also imposed a $3.5 million judgment, which has been suspended because defendants are unable to pay.