On September 22, the Federal Trade Commission (FTC) announced that the U.S. District Court for the Central District of California issued a permanent injunction prohibiting five defendants involved in mortgage relief scams from mortgage loan modification and debt relief business.
The FTC brought a lawsuit against the five defendants in July 2014, following a joint federal-state enforcement effort known as “Operation Mis-Modification.” The FTC alleged that the defendants falsely claimed that they could lower consumers’ mortgage payments and interest rates or prevent foreclosure. Defendants also falsely claimed to be affiliated with government agencies or the consumers’ existing lenders or servicers. The FTC also alleged that they charged illegal advance fees.
The Court granted the FTC’s motion for summary judgment against one individual defendant, finding that he directed the scheme, in violation of the FTC Act and Mortgage Assistance Relief Services Rule. The court also entered default judgment against the other four defendants. All five are prohibited from offering any debt relief product or service or misrepresenting any material fact relating to financial products and services. They were also ordered to pay $1,784,864 in restitution.