A federal court has entered orders against 22 defendants who offered financially strapped consumers fake home-loan modification services that the FTC claims violated the FTC Act and the Mortgage Assistance Relief Services (MARS) Rule. The MARS Rule bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.
The orders collectively ban 21 of the defendants from advertising, promoting, or selling unsecured debt relief products and services; misrepresenting any material facts related to financial products or services; misrepresenting material facts related to any other types of services; and benefiting from any consumer information they collected through the scheme. The 22nd defendant, Business Team, must turn over its proceeds from the defendants’ activities. The orders against all of the defendants impose monetary judgments in varying amounts to remedy the almost $51 million of consumer injury from the defendants’ activities.
“It’s appalling when scammers take money from people already struggling to pay their mortgages,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We shut down this phony mortgage relief operation, and we’ll continue to stick up for people in financial distress.”
The FTC filed its original complaint in this action in June 2013 against 10 defendants and an amended complaint in December 2013, adding another 12. According to the FTC’s amended complaint, the defendants operated as two loan modification enterprises, each of which falsely claimed it would provide legal help to save consumers’ homes from foreclosure and lower their mortgage payments. The enterprises then charged up-front fees of between $2,500 and $3,500, but delivered little or no help, deepening the consumers’ financial distress.
Both enterprises marketed their scheme using an official looking mailer that urged consumers to act quickly before they “FORFEIT LEGAL RIGHTS,” or face a “statute of limitations and government program deadlines.” They falsely promised lower monthly payments and interest rates, and the conversion of adjustable-rate to fixed-rate mortgages.
The enterprises also marketed their scheme online, through telemarketing calls, and with television and radio ads. Their websites touted a range of services, including bankruptcy advice, credit counseling, and “forensic mortgage audits,” falsely claiming that such “audits” could uncover any “lending violations” committed by lenders.
Each defendant is subject to a court order, resulting from either a negotiated settlement, a default judgment (for the defendant’s failure to respond to the Commission’s amended complaint), or a sanction for failing to participate in the litigation:
- A to Z Marketing, Inc.; Apex Members, LLC; Apex Solutions, Inc.; Expert Processing Center, Inc.; Smart Funding Corp.; Ratan Baid; and Madhulika Baid entered into a stipulated final order;
- Top Legal Advocates, P.C., entered into a stipulated final order;
- Backend, Inc., entered into a stipulated final order;
- William D. Goodrich and William D. Goodrich Atty, Inc. had a judgment entered against them as a sanction. Both defendants answered the amended complaint but then failed to respond to discovery or otherwise participate in the litigation.
- Evergreen Law Offices, PLLC, had a default judgment entered against it for its failure to respond to the Commission’s amended complaint;
- Backend Services, Inc.; Emax Loans, Inc.; Legal Marketing Group, Inc.; Nationwide Law Center, Inc.; United States Law Center, P.C.; Interstate Law Group, LLC; Millennium Law Center, P.C.; and SC Law Group, P.C., had default judgments entered against them for their failures to respond to the Commission’s amended complaint;
- Amir Montazeran had a default judgment entered against him for his failure to respond to the Commission’s amended complaint;
- Business Team, LLC, had a default judgment entered against it for its failure to respond to the Commission’s amended complaint.
Business Team and Montazeran are appealing the judgments against them.
Each Commission vote approving the stipulated final orders was 5-0. The stipulated final orders were filed in the U.S. District Court for the Central District of California, and have now all been entered by the Court.
For consumer information about avoiding mortgage and foreclosure rescue scams, see Home Loans.
NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.