FTC Files Separate Suits Against Three Mortgage Relief Companies

Three mortgage relief companies are in hot water after the ""Federal Trade Commission"":http://www.ftc.gov/ (FTC) charged them with using deceptive tactics to prey on distressed homeowners.

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The FTC filed three separate suits against Prime Legal Plans, American Mortgage Consulting Group, and Expense Management America for allegedly violating its Mortgage Assistance Relief Services (MARS) Rule, which prohibits certain practices commonly used by fraudulent mortgage assistance companies.

According to the FTC's complaint, Prime Legal Plans, which also operated under the names ""Reaching U Network"" and ""American Legal Plans,"" marketed scam mortgage relief services in English and Spanish, telling consumers in debt that attorneys would review their documents to look for fraud and use the resulting ""forensic audit"" information to negotiate more favorable mortgage terms.

The defendants allegedly told consumers that ""80 percent of mortgages contain some fraud"" and promised its attorneys had already helped hundreds of Americans keep their homes.

The company also billed itself on its websites as a ""private charity working for struggling consumers that can't afford legal representation,"" the FTC said.

The commission's complaint against American Mortgage Consulting Group alleges the company claimed a phony affiliation with the United States government, often telling consumers the company was paid by the government to assist homeowners and obtain ""Home Saver"" grants. The defendants also allegedly represented themselves as ""a California Professional Legal Team,"" sending documents from a false ""Legal Department"" and referring to their operation as a ""law office.""

The defendants told clients to stop all payments and communications to their lenders, putting them in danger of losing their homes and sometimes disqualifying them for actual government assistance, the FTC said.

The suit against Expense Management America alleges the defendants cold-called thousands of customers (including some whose numbers were registered on the Do Not Call Registry) and promised to substantially reduce their payments for a fee, claiming special relationships with lenders. The FTC said the defendants also used a series of websites and digital brochures to obtain customers' authorization to withdraw funds from their checking accounts.

One such brochure told consumers to follow the ""Golden Rule,"" which was to cease communications with their creditors, the FTC said.

All three companies advertised false results and charged up-front fees for loan negotiations, the FTC alleges. Both practices are a violation of the MARS Rule.

The FTC's complaints came about as a result of the Distressed Homeowner Initiative, a federal effort to stop predatory foreclosure rescue, mortgage modification, short sales, and bankruptcy schemes targeting distressed homeowners. According to federal officials, the year-long initiative resulted in indictments against 530 criminal defendants.

Since 2008, the FTC has brought more than 40 cases against companies offering fraudulent mortgage relief services. FTC chairman Jon Leibowitz said these cases affirm the commission's tough stance on fraud.

""With many homeowners still struggling to hold onto their homes, the FTC takes a hard line against con artists who are seeking their next victim,"" Leibowitz said.