On February 23, 2017, the Federal Trade Commission (FTC) announced that it entered into a settlement with the final individual defendant in an alleged mortgage relief scheme worth over $1.7 million.
As a result of a joint federal-state enforcement sweep known as “Operation Mis-Modification,” the FTC filed a complaint in 2014 (and an amended complaint) against six defendants for violations of federal law. According to the FTC, the defendants violated Section 5(a) the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive commercial acts or practices, by falsely representing that they could help lower consumer mortgage payments and interest rates, and falsely claiming to be associated with government agencies or the consumers’ lenders or servicers. The FTC further alleged that the defendants charged illegal advance fees for their services in violation of the Mortgage Assistance Relief Services (MARS) Rule, 16 C.F.R. Part 322, recodified as 12 C.F.R. Part 1015 (Regulation O), which bans the collection of fees for mortgage foreclosure rescue and loan modification services until homeowners have an acceptable written offer from their lender or servicer.
In September 2016, the U.S. District Court for the Central District of California granted summary judgment against one individual defendant and entered default judgments against four others, which Enforcement Watch reported on here. Litigation against the final defendant continued until the court entered Stipulated Order of settlement on February 21, 2017. As part of the settlement, the defendant was permanently banned from advertising or offering any secured and unsecured debt relief products and services; prohibited from making misrepresentations relating to financial and other products and services; and held liable for $1,784,864, jointly and severally with the other defendants, as restitution. At this time, the defendant was only ordered to pay the FTC $105,487. The remainder of the judgment was suspended based on a review of the defendant’s financial representations.