The Federal Trade Commission has closed a mortgage foreclosure operation that promoted bogus loan modification and foreclosure relief services, officials announced today. The FTC also imposed a $12 million judgment against the operation.
The FTC in February 2009 charged National Foreclosure Relief Inc. and three of its principals with falsely claiming they would stop foreclosure or fully refund consumers’ money. At that time, the court temporarily halted the defendants’ deceptive practices pending trial, froze their assets and appointed a receiver to take control of the business and its assets.
Many homeowners paid the company upfront fees as high as $1,000, but still ultimately lost their homes to foreclosure. Others avoided foreclosure only through their own efforts. After paying the fee, consumers who contacted the company were often either ignored or falsely told that negotiations with their lenders were under way.
The case is one of 17 lawsuits the FTC has brought in the past 11 months, cracking down on mortgage relief frauds that target financially strapped homeowners. More cases are being investigated.
The FTC officially reached settlements with National Foreclosure Relief and a former director, Chele Stone, also known as Chele Medina, that bans them from the mortgage modification business. The settlement orders permanently prohibit them from making misrepresentations to consumers about financial goods and services, such as loan terms, the ability to improve someone’s credit history, and how much a consumer would save by enrolling in a debt relief service, or making misrepresentations about any good or service, such as refund terms and government affiliation.
National Foreclosure Relief and Stone also are prohibited from seeking payment from or enforcing any contracts with customers who enrolled in their program before the FTC’s lawsuit, and from selling or otherwise disclosing customers’ personal information.
The settlements impose a $12 million judgment, approximately $500,000 of which will be paid from company funds frozen by the court. The full judgment against Stone will become due immediately if she is found to have misrepresented her financial condition. Litigation will continue against the remaining two defendants in the case.
