*error*FTC cracks down on mortgage relief scheme that scammed clients for millions

by Ryan Smith21 Jun 2016
The Federal Trade Commission has halted a mortgage relief operation that the agency says has bilked homeowners out of millions of dollars.

The FTC convinced a federal court to temporarily halt the mortgage relief operations of attorneys operating under the names Brookstone Law and Advantis Law. The agency is seeking to permanently stop the attorneys’ alleged scam.

According to the FTC, the law firms falsely told homeowners they could join a so-called “mass joinder” lawsuit that would save them from foreclosure and possibly offer additional financial rewards.  The agency said the promise of a mass joinder suit is a ruse often employed in mortgage relief scams.  In this case, the law firms claimed they would bring lawsuits against lenders for mortgage fraud and void consumers’ mortgages “to give you your home free and clear, and/or to award you relief and monetary damages.”

Unlike in a class-action lawsuit, each plaintiff in a mass joinder suit would have to prove his or her case separately. While the attorneys involved in the alleged scam have sued several banks, the FTC alleges that they haven’t won any cases – and most were dismissed because the lawyers never pursued them. The FTC said the law firms didn’t have attorneys who could litigate hundreds or thousands of cases.
“Preying on homeowners who are already financially distressed and struggling to pay their mortgages is appalling,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “That’s why stopping phony mortgage relief operations like this one is a priority at the FTC.”

According to the FTC, the defendants sent marketing materials to homeowners that included information such as their loan amount and property identification number, along with statements like, “Your home will be sold at auction unless you take immediate action. Those who responded were told they could join a lawsuit if they paid $895 – sometimes more – in advance for a “legal analysis.” Consumers were told they were either likely or certain to win in a lawsuit against their lender, and some were charged thousands of dollars in recurring monthly fees, the FTC alleged. The law firms also allegedly failed to deposit those fees in client trust accounts as required by law.

According to the FTC, the defendants falsely promised some clients that they would be added as plaintiffs in lawsuits. Others were added, but months after they were told they would be. Clients’ requests for information were routinely ignored. According to the FTC, the defendants also failed to tell clients when their lawsuits had been dismissed and kept collecting fees. Clients’ requests for refunds were refused.