FTC charges 11 companies, 3 individuals over fraudulent loan modification scheme

A federal court has frozen the defendant’s assets

FTC charges 11 companies, 3 individuals over fraudulent loan modification scheme
The Federal Trade Commission has accused a group of 11 companies and three individuals of running a loan modification scheme that targeted financially distressed homeowners by offering foreclosure prevention and mortgage payment reduction.

The FTC charged the defendants with violations of the FTC Act and the Mortgage Assistance Relief Services Rule. The defendants include entities Preferred Law, Consumer Defense (Nevada), Consumer Defense (Utah), Consumer Link, American Home Loan Counselors, American Home Loans, Consumer Defense Group, Brown Legal, AM Property Management, FMG Partners, Zinly, and individuals Jonathan Hanley; Benjamin Horton, and Sandra Hanley.

At the FTC’s request, a federal court has temporarily halted the scheme and frozen the defendant’s assets.

According to the FTC, the defendants falsely suggested that they operated through an affiliation with or under an endorsement by the federal government’s Making Home Affordable loan modification program by using doctored government logos in correspondence with consumers. The defendants also told victims they had special relationships with certain lenders and advised them not to pay their mortgage to or communicate with their lenders.

The FTC further alleged that the defendants usually charged victims advance fees of $3,900 in $650 monthly installments. The fees were in exchange for what the defendants claimed as expert legal assistance that had a success record of 98% to 100%. The defendants also told victims that they would halve interest rates and reduce monthly mortgage payments by hundreds of dollars.

While consumers paid hundreds or thousands of dollars, the FTC said the defendants failed to obtain the promised loan modifications and, in certain cases, were unable to contact the lenders at all. As a result, many people incurred substantial interest charges and other penalties for paying the defendants instead of their mortgage payments, and some lost their homes to foreclosure.


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