A federal court has halted a sham operation that promised homeowners to help get their mortgages modified but instead allegedly stole their mortgage payments, thus ushering some deeper into foreclosure and bankruptcy. 

The Federal Trade Commission now seeks to permanently stop the operation and its participants' practices. The FTC filed a contempt action against one of the principals, Brian Pacios, who is under a previous court order banning him from mortgage relief activities.

The defendants, at times doing business as HOPE Services and more recently as HAMP Services, allegedly targeted consumers facing foreclosure, particularly those who had failed to obtain any relief from their lenders, according to the FTC complaint. Pretending to be nonprofit organization with government ties, the operation sent mail with what looked like an official government seal and indicated that the recipients might be eligible for a "New 2014 Home Affordable Modification Program” - called HAMP 2.

The defendants called the program "an aggressive update to Obama’s original modification program," and stated that "[y]our bank is now incentivized by the government to lower your interest rate."

The defendants falsely claimed they had a high success rate, special contacts who would help get loan terms modified and an ability to succeed even when consumers had failed. After getting consumers' financial information, they told them they were preliminarily approved and claimed they would submit consumers’ loan modification applications to the U.S. Department of Housing and Urban Development, the Neighborhood Assistance Corporation of America and the Making Home Affordable (MHA) program. 

The MHA application form the operation sent consumers excluded the page that warns, "BEWARE OF FORECLOSURE RESCUE SCAMS" and "never make your mortgage payments to anyone other than your mortgage company without their approval."

The defendants include Chad Caldaronello, also known as Chad Carlson and Chad Johnson; C.C. Enterprises Inc., doing business as HOPE Services, Retention Divisions and Trust Payment Center; Justin Moreira; Derek Nelson; D.N. Marketing Inc., d/b/a HAMP Services and Trial Payment Processing; and Brian Pacios. They are charged with violating the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (MARS) and its Telemarketing Sales Rule (TSR).

Denny Lake, d/b/a JD United, Advocacy Department, Advocacy Division, and Advocacy Agency, is charged with knowing or consciously avoiding knowing the other defendants were violating the MARS and TSR. A relief defendant, Cortney Gonsalves, is charged with holding money and assets she received from the scam.

"These defendants stole mortgage payments from struggling homeowners and they pretended to be a nonprofit working with the government,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "We’ll continue to shut down shameful mortgage frauds like this one."

The defendants, according to the complaint, falsely told consumers they were approved for a low interest rate and monthly payments significantly lower than their current payment. Consumers were told that after making three monthly trial payments and often a fee to reinstate a defaulted loan, they would get a loan modification and be safe from foreclosure. Consumers also were told not to speak with their lender or an attorney.

In reality, homeowners who made the payments did not have their mortgages modified and their lenders never received trial payments, the FTC alleged. Instead, they were contacted by an "Advocacy Department" run by defendant Denny Lake and told that the department would get them an even better loan modification than the one purportedly obtained through MHA, according to the FTC’s complaint. 

The "Advocacy Department" was just another trick designed to make sure consumers continued to make all of the monthly trial payments, according to the FTC. When consumers raised concerns about continuing foreclosure warnings, sale date notices and even court dates, they were told their loan modification was being processed or nearly completed.

By keeping consumers on the hook for months, the defendants doubled, tripled or quadrupled consumers' trial payments, the FTC alleged. They told consumers they would put these payments in escrow accounts and eventually pay off consumers’ lenders. In fact, the defendants simply took the money for themselves. As a result, some consumers lost their homes, and most consumers incurred additional penalties and interest as they fell further behind on their mortgages.

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