The FTC has banned the defendants, led by Philip Danielson and his company, Danielson Law Group, from offering mortgage assistance relief services and from participating in the debt relief industry.
“It’s troubling when anyone takes advantage of homeowners in financial distress,” Jessica Rich, director of the Bureau of Consumer Protection, said. “This scam is particularly offensive because it used an attorney’s legal credentials to create a facade of authenticity.”
The FTC filed its complaint in July 2014 as part of a multi-agency federal and state law enforcement sweep targeting operations that fraudulently pitched loan modifications to consumers. At the FTC’s request, a U.S. district court temporarily halted the operation, which promised legal help to consumers to avoid foreclosure or get relief from unaffordable mortgages, but then did little or nothing to help.
According to the FTC, the Utah-based group lured consumers into paying $500 to $3,900 by falsely promising that attorneys would negotiate loan modifications that would substantially reduce the consumers’ mortgage payments.
The group touted a success rate that exceeded 90% purportedly based on their legal expertise and a pre-qualification process that identified clients that they knew they could help. The complaint also alleged that the defendants used the name Danielson Law Group and other attorney or law firm names to look like they had lawyers all over the country, even though many consumers never met or spoke to an attorney.
The FTC charged the company with violating the FTC Act and the Mortgage Assistance Relief Services (MARS) Rule, now known as Regulation O. The rule bans mortgage foreclosure rescue and loan modification service providers from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.
The proposed settlements also include a $28.6 million judgment against all the defendants, reflecting the total amount of fees taken in by the scheme. The proposed judgment will be suspended as to the individual defendants provided they surrender certain assets, including a $200,000 house in Utah as required by the settlement orders.
The FTC said if the defendant provided false financial information to the agency, the full amount of the judgment against them will become due. The proposed settlement also requires relief defendant April Norton to turn over unearned, ill-gotten gains that she received from the scheme. The full judgment remains in affect against the corporate defendants.
A Utah-based group claiming to be legal experts in loan modifications has settled Federal Trade Commission (FTC) charges that they broke the law by conning consumers into paying hefty fees for worthless mortgage relief services.