20 Jan Mortgage Foreclosure “Rescue” Service Settles FTC Unfair Trade Practices Lawsuit for $1.2 Million
On January 5, 2009, Florida-based Mortgage Foreclosure Solutions, Inc.,agreed to a $1.2 million settlement with the Federal Trade Commission. The FTC had sued the foreclosure “rescue” service in February 2008, alleging unfair and deceptive practices in violation of federal law. The defendant claimed, in numerous websites and blogs, that it could stop mortgage foreclosures regardless of consumers’ payment histories or financial condition. One promotion stated, “We are so confident of our abilities to provide you with a solution in stopping your foreclosure that we guarantee our services in writing to you.”
The FTC’s complaint further alleged that consumers were charged an upfront fee of $1,200 after calling a toll free number and being interviewed about their mortgage foreclosure; regardless of their financial condition, consumers were told they qualified for a workout plan. The FTC alleged that after receiving payment, the defendant failed to return consumers’ telephone calls, or that consumers were told the defendant was working on a solution or that no solution could be achieved after all. The complaint stated that many consumers lost their homes to foreclosure, or that consumers prevented foreclosure through their own efforts.
Under the terms of the settlement filed in U.S. district court in Tampa, Florida, the defendant agreed to pay the FTC $1.2 million. Because of the defendant’s lack of resources, the FTC agreed to suspend payment of all but $8,320 of the judgment, unless the defendant was later found to have misrepresented its financial condition. The defendant also agreed to a list of conditions prohibiting future activities promising mortgage foreclosure “rescues.”
The FTC’s website, www.ftc.gov, contains a publication designed to assist consumers from falling victim to mortgage foreclosure “rescue” scams. The publication advises that consumers avoid doing business with any firm that:
See “Facts for Consumers, Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress,” available at www.ftc.gov.
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