A federal court has temporarily halted Los Angeles-based Wealth Educators Inc. and its president from offering mortgage relief services after the Federal Trade Commission charged the operation with failing to provide the help promised to homeowners, while charging a large illegal upfront fee for services.
The company also told consumers to stop making their monthly mortgage payments, leading some facing the prospect of foreclosure.
"Companies offering such services cant charge a fee until you have an acceptable written offer from your lender or servicer. If they ask for payment first, walk away,said Jessica Rich, director of the FTCs Bureau of Consumer Protection.
According to the FTCs complaint, since at least October 2012, Wealth Educators defendants have operated under several names, including Legal Educators USA & Co., Stargate Mutual & Associates, Providence Financial Advocates and Providence Financial Audits, while selling supposed mortgage relief services to consumers.The defendants used outbound telemarketing to pitch programs to consumers. Many consumers were homeowners in financial trouble and the company promised it could help them by lowering their monthly mortgage payment, lowering their mortgage interest rate or obtaining loan modification or restructuring.
The defendants also used websites allegedly set up by Veronica Sesma, the owner and president of Wealth Educators, to advertise the supposed mortgage relief services.
Before providing any services, according to the complaint, Wealth Educators charged consumers a fee ranging from $1,000 to $5,000, promising the money would be fully refunded if the company didnt provide the relief it promised.
Wealth Educators told many consumers they could get them a loan modification, often through a government-sponsored program, and quoted an amount that consumers mortgage payments would be reduced. Still, the company allegedly often did not provide the promised relief services.
The company further told consumers to stop communicating with their lenders, delaying them from discovering that Wealth Educators had not obtained the promised mortgage relief. Finally, while promising a "100% refund" of the service fee if it did not provide the promised mortgage relief services, consumers who tried to get their money back could not do so.
The FTC charged the defendants with violating the FTC Act and the Mortgage Assistance Relief Services 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. In filing the complaint, the FTC seeks an immediate halt to the defendants allegedly deceptive conduct, along with an asset freeze to ensure the preservation of funds for possible consumer redress.
Defendants named in the case include: Wealth Educators, Inc., also doing business as (d/b/a) Family 1st Preservations; Family 1st Home Loans; Legal Affiliates & Associates; Legal Educators & Co.; Family 1st Home Preservation; Legal Educators USA & Co.; Stargate Mutual & Associates; Providence Financial Associates; and Providence Financial Audits; as well as Veronica Sesma, also d/b/a Sesma Consulting.