Federal, State Agencies Go After Foreclosure Rescue Companies

The Federal Trade Commission (FTC) and prosecutors in 19 states have filed 189 legal actions against companies and individuals they say are carrying out loan modification scams and deceptively marketing foreclosure rescue services.
All of the lawsuits were filed in the U.S. district Court for the Central District of California, except for one filed in the U.S. District Court for the District of Idaho. Officials are asking the court for a permanent bar against the companies, including ""U.S. Foreclosure Relief"":http://www.ftc.gov/os/caselist/0923120/index.shtm, ""Loss Mitigation Services"":http://www.ftc.gov/os/caselist/0923073/index.shtm, ""Lucas Law Center"":http://www.ftc.gov/os/caselist/0923127/index.shtm, and ""Apply2Save"":http://www.ftc.gov/os/caselist/0923117/index.shtm. They are also seeking millions of dollars in civil penalties and restitution for the victimized homeowners.
FTC Chairman Jon Leibowitz and California Attorney General Jerry Brown made ""the announcement"":http://www.ftc.gov/opa/2009/07/loanlies.shtm at a press conference in Los Angeles this week as part of Operation Loan Lies, a coordinated national law enforcement effort to crack down on mortgage modification scams.
FTC Chairman Jon Leibowitz said, ""These con artists see the high foreclosure rates as an opportunity to prey on people in distress. They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline.""
Leibowitz also encouraged homeowners to avoid foreclosure consultants that charge upfront fees, guarantee to stop a foreclosure or modify a loan, or advise against continuing payments to the mortgage company.
Operation Loan Lies follows a pledge made in early April by Leibowitz, when he was joined by Treasury Secretary Timothy Geithner, HUD Secretary Shaun Donovan, and several state attorneys general - a united front to step up enforcement efforts against those who target struggling homeowners with false claims of mortgage relief.