Mortgage relief firms agree to pay $3.6 million for alleged scam
WASHINGTON -- A web of Florida-based companies and their operators have agreed to pay nearly $3.6 million to settle allegations that it bilked homeowners in a nationwide mortgage relief scam, the Federal Trade Commission said Tuesday.
The settlement is the largest yet obtained by the agency in a crackdown against companies trying to take advantage of struggling homeowners looking to lower their mortgage payments and other debt following the housing market crash.
“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, director of the agency’s Bureau of Consumer Protection.
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“They broke the law by taking money upfront and making false promises,” she said.
As part of the multiagency federal Distressed Homeowner Initiative, the FTC in 2012 charged 11 companies and five people with running an illegal mortgage relief scam.
Based in South Florida, the operation used several names, including Prime Legal Plans, Freedom Legal Plans, American Hardship and the Reaching U Network.
Through a national telemarketing campaign in English and Spanish, the companies promised to prevent foreclosure or significantly reduce mortgage payments. Customers were promised an expert mortgage foreclosure defense attorney to stop foreclosure proceedings.
But the FTC said people paid upfront fees of $595 to $750 a month and received little or no help, pushing them further into debt.
Federal law prohibits companies from collecting fees for mortgage relief services until a homeowner has an acceptable written offer from a bank or servicer, the FTC said.
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