FTC Sues Florida Loan Modification Firm

Continuing their crackdown on scam artists that prey upon delinquent homeowners facing foreclosure, the Federal Trade Commission has charged a national operation with marketing bogus loan modification services. The FTC has sought to stop their illegal practices and force payment of restitution to victims.

Based in Palm Beach County, U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., LowerMyDebts.com LLC, David Mahler, Jamen Lachs, and John Incandela, Jr., also known as Jonathan Incandela, Jr., allegedly violated the FTC Act and the FTC’s Telemarketing Sales Rule by falsely claiming they could obtain loan modifications that would drastically reduce mortgage payments for distressed homeowners.  

They also allegedly misrepresented approval and affiliation with mortgage lenders and falsely claimed they would fully refund homeowners money if they failed to receive a loan modification.

According to the FTC’s complaint, distressed homeowners were targeted using direct mail, the Internet, and telemarketing.  Homeowners were falsely promised a loan modification that would reduce their monthly mortgage payments, while being promised a full refund if they failed.  Promises were also made to homeowners whose lenders had previously denied them loan modifications or who had been sent foreclosure notices.  Claiming a success rate of almost 100%, homeowners were charged up to $2,600 and typically requested for half of the fee upfront.

The defendants claimed expertise that enabled them to prevent foreclosure and often mislead homeowners that they were affiliated with or approved by lenders.  They advised homeowners not to contact their lenders and to stop making mortgage payments, claiming that falling behind on payments would demonstrate a hardship to lenders.

In addition, the defendants allegedly violated the FTC Rule by calling numbers listed on the National Do Not Call Registry, and for not paying the required annual fee for accessing numbers within the Registry.

In 2009, the Florida legislature passed Senate Bill SB 2226, making significant changes to Florida’s mortgage brokerage law.  The law – Chapter 494, Florida Statutes – specifically covered negotiation of existing loans as being the duty of a licensed mortgage broker.  As of January 1, 2010, any individual or business attempting to negotiate a loan or mortgage modification must be licensed through the Florida Office of Financial Regulation.  Additionally, new disclosures are required such as large-type print on contracts and a three-day rescission period.

“The days of simply opening up shop and starting a loan modification business have come to an end in Florida,” says Carlos Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale.  “Individuals or businesses providing loan modification services must be licensed as a mortgage broker by the OFR in order to conduct business and cannot charge advance fees.”

The FTC recently issued the Mortgage Assistance Relief Services Rule, that prohibits mortgage foreclosure and loan modification services from collecting fees until homeowners have a written offer from their lender that they personally find acceptable. As the defendants’ advertisements predated this new Rule, the FTC did not allege violations in this case.

To learn more about the action taken against U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., Lower My Debts.com LLC, or to file a complaint with the Federal Trade Commission, visit www.ftc.gov or call (877) FTC-HELP (877-382-4357).

To learn more about mortgage fraud or the loan modification process in Florida or to file a complaint with the Attorney General’s Office, visit www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226). 

To review Bill Lewis’ entire consumer protection series, visit www.williamlewis.us.

William E. Lewis Jr. & Associates is a solutions based professional consulting firm specializing in the discriminating individual, business or governmental entity.  To learn more, tune into “The Credit Report with Bill Lewis,” a daily forum for business and financial news, politics, economic trends, and cutting edge issues on AM 1470 WWNN.

Original Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune – Media General Group:  http://www2.highlandstoday.com/content/2011/mar/13/ftc-sues-florida-loan-modification-firm/columns-welewisjr/