The settlement brings to an end a crackdown begun in 2012, when the FTC charged 11 companies and five individuals with running an illegal mortgage relief scam in South Florida. According to the FTC, the defendants used a phony nonprofit called Reaching U Network, as well as “a maze of other companies,” to lure troubled homeowners with the promise that their mortgage payments could be lowered or their homes saved from foreclosure.
“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 FTC’s Bureau of Consumer Protection. “They broke the law by taking money upfront and making false promises.”
According to the FTC, the defendants – who marketed the program through national outbound calls in English and Spanish – promised consumers that they would lower mortgage payments or prevent foreclosures by auditing the consumers’ loans and providing access to legal representation. The FTAC alleged that the defendants told consumers that “80% of mortgages contain some fraud,” and that sometimes small errors on loan documents could nullify a mortgage. They also allegedly promised to assign consumers an expert attorney to “halt the foreclosure process.”
Participants in an alleged mortgage relief scam have reached a settlement with the Federal Trade Commission under which they will surrender their assets, pay nearly $3.6 million to redress victims, and be banned from providing mortgage or debt relief services. The settlement is the FTC’s largest to date against an alleged mortgage relief scammer.