• CFPB, FTC, and 15 States Announce Suits against Foreclosure Relief Companies
  • August 26, 2014 | Authors: Peter L. Cockrell; Brett M. Kitt; J. Scott Sheehan
  • Law Firms: Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Washington Office ; Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Houston Office
  • On July 23rd, the CFPB, the Federal Trade Commission (FTC), and 15 states announced a concerted effort against foreclosure relief companies that were allegedly using false and deceptive means to market foreclosure relief services to distressed homeowners. The CFPB sued three companies, and individuals associated with those companies, that allegedly collected more than $25 million in advance fees for foreclosure relief services. The CFPB is seeking monetary compensation for consumers, civil fines and injunctions against the companies. As a part of the concerted effort, the FTC also filed six lawsuits and the states took 32 actions.

    The CFPB alleges that the companies engaged in deceptive marketing practices in order to convince consumers to pay advance fees in exchange for promised mortgage modifications. In addition, the CFPB alleges that the companies falsely claimed to be performing legal work on behalf of consumers. The companies also allegedly inflated their success rates and the likelihood of obtaining modifications for consumers.

    The CFPB alleges that this conduct violated Regulation O, which generally bans mortgage assistance relief companies from receiving advance fees for their services. In addition, Regulation O prohibits deceptive statements relating to the services and imposes certain disclosure requirements when the companies market their services. The CFPB also alleges that the companies violated the Dodd-Frank Act's general prohibition against deceptive acts and practices relating to consumer financial products.

    In conjunction with the announcement of the enforcement actions, the CFPB also released a consumer advisory aimed at helping consumers identify and avoid foreclosure relief scams.