The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission and 15 states have brought action against three different foreclosure relief firms for engaging in deceptive marketing practices and charging illegal upfront fees.
Specifically, the bureau alleges that Clausen & Cobb Management Co. Inc. and Siringoringo Law Firm charged thousands of homeowners in California illegal advance fees for mortgage modifications. The one-time, upfront fees ranged from $1,995 to $3,500, in addition to monthly fees of $495, according to the CFPB. The bureau says company officials Stephen Siringoringo, Alfred Clausen and Joshua Cobb staffed and supported the deceptive loan modification operations of Stephen Siringoringo's Southern California law firm.
The CFPB also brought action against The Mortgage Law Group (TMLG) and Consumer First Legal Group (CFLG) for charging more than $19.2 million in fees from over 10,000 distressed homeowners nationwide, with most, if not all, of that money coming from illegal advance fees for so-called loan modification services. Both TMLG and CFLG have ceased operations, but the CFPB is seeking redress for consumers harmed by their practices and permanent injunctive relief against the principals, Thomas Macey, Jeffrey Aleman, Jason Searns and Harold Stafford.
In addition, the CFPB brought action against the Hoffman Law Group (HLG) for allegedly accepting more than $5 million in illegal upfront fees for foreclosure relief services. Specifically, the bureau says the firm sold consumers the chance to join mass lawsuits as plaintiffs and falsely claimed that the lawsuits would help the consumers get mortgage loan modifications or foreclosure relief. HLG typically charged consumers an upfront fee of $6,000, plus a $495 monthly maintenance fee. The bureau also alleges that the HLG frequently failed to help consumers obtain relief and often did not answer or return phone calls and emails from consumers who had already paid their fees.
The bureau's civil action against the HLG was filed jointly with the attorney general for the State of Florida. Upon filing the complaint against the HLG, the bureau and the State of Florida sought, and were granted, a temporary restraining order freezing the company's assets and installing a receiver to ensure that the alleged illegal conduct ceases.
The complaint against the HLG specifically names company officials Michael Harper, Benn Wilcox and attorney Marc Hoffman, as well as the firm's affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions and BM Marketing Group. Â
The CFPB says these three companies, in combination, collected more than $25 million in illegal advance fees for foreclosure relief. Regulation O, formerly known as the Mortgage Assistance Relief Services (MARS) Rule, generally bans foreclosure relief companies from requesting or receiving upfront payments for mortgage modifications before a consumer has signed a mortgage modification agreement from his lender.
Regulation O also prohibits foreclosure relief companies from engaging in deceptive marketing practices and requires certain disclosures when companies market relief services.
In addition, the CFPB alleges that some of the defendants violated the Dodd-Frank Act, which generally prohibits deceptive practices in the consumer financial market.
‘We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,’ says Richard Cordray, director of the CFPB, in a statement. ‘These companies pocketed illegal fees – taking millions of hard-earned dollars from distressed consumers – and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible.’
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