Financially distressed consumers on the brink of foreclosure have enough to worry about without having to be on the lookout for shady mortgage relief companies making hollow promises to save their homes. Today, the Federal Trade Commission put an end to an operation that took advantage of homeowners’ vulnerabilities.
The FTC announced today that a court had granted the agency’s request to halt the operation of HOPE Services – also doing business as HAMP Services – alleging that the mortgage relief enterprise promised homeowners it would help get their mortgages modified, but instead effectively stole their mortgage payments, leading some to foreclosure and bankruptcy.
According to the FTC complaint [PDF], the operation targeted consumers facing foreclosure – especially those who had failed to get any relief from lenders – by pretending to be “nonprofit” with government ties.
The company allegedly sent homeowners mail bearing what looked like an official government seal, and indicated that the recipients might be eligible for a “New 2014 Home Affordable Modification Program” (HAMP 2).
HAMP 2 was described by the company as “an aggressive update to Obama’s original modification program,” saying that consumers’ banks now have an incentive from the government to lower interest rates.
The company drew consumers into its scheme by falsely claiming it had a high success rate, special contacts who would help get loan terms modified, and an ability to succeed even when consumers had failed, the FTC complaint states.
Once HOPE Services obtained consumers’ financial information, the company falsely told them they were “preliminarily approved” and claimed they would submit loan modification applications to the U.S. Department of Housing and Urban Development, the Neighborhood Assistance Corporation of America and the “Making Home Affordable” program.
Shortly after this, the company told consumers they were approved for a low-interest rate and monthly payments significantly lower than their current payment. They were also told that making three monthly trial payments and providing a fee to reinstate a defaulted loan would get them a loan modification and make them safe from foreclosure.
Consumers were also allegedly advised not to speak with their lender or an attorney.
In reality, the FTC alleges in its complaint, homeowners who made the payments did not have their mortgages modified and their lenders never received their trial payment.
Consumers who were promised the loan modifications were then contacted by an Advocacy Department’ run by one of the defendants named in the FTC complaint, and told that the fictional department could get them an even better loan modification than the one purported obtained by through the Making Home Affordable program.
The Advocacy Department was developed to allegedly trick consumers into continuing to make all of the monthly trial payments. When concerns were raised by consumers about continuing foreclosure warnings, sale date notices and court dates, they were told their loan modifications were being processed or nearly completed.
According to the FTC, by keeping consumers on the hook for months, the operation was able to significantly increase consumers’ trial payments.
Consumers were told their payments were put in escrow accounts and would eventually be used to pay off lenders.
Instead, the company took the payments for themselves, often leading consumers to lose their homes, and incur additional penalties and interest as they fell behind on their mortgages.
In addition to halting the operation’s business, the FTC has filed a contempt complaint against one of the scheme’s principals, Brian Pacios, who is already under a court order that prohibited him from mortgage relief activities.
Court Halts Mortgage Relief Operation that Targeted Homeowners Facing Foreclosure [Federal Trade Commission]
by Ashlee Kieler via Consumerist
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