The Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and 15 states announced a sweep against alleged foreclosure relief scammers that used deceptive marketing tactics to rip off distressed homeowners across the country. The bureau is filing three lawsuits against companies and individuals that purportedly collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages. The CFPB is seeking compensation for victims, civil fines and injunctions against the alleged scammers. Separately, the FTC is filing six lawsuits, and the states are taking 32 actions.
“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” said CFPB Director Richard Cordray. “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.”
The first lawsuit names Clausen & Cobb Management Co. and owners Alfred Clausen and Joshua Cobb, as well as Stephen Siringoringo and his Siringoringo Law Firm. The second lawsuit is against The Mortgage Law Group LLP, the Consumer First Legal Group LLC and attorneys Thomas Macey, Jeffrey Aleman, Jason Searns and Harold Stafford. The third lawsuit is against the Hoffman Law Group, its operators, Michael Harper, Benn Wilcox and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions and BM Marketing Group.
The CFPB alleges that the firms used deceptive marketing to persuade thousands of consumers to pay millions in illegal, upfront fees for promised mortgage modifications. Each of the defendants was a law firm or was associated with one. The defendants disguised their false promises of foreclosure relief for struggling homeowners with claims that they were performing legal work, the bureau said.
The CFPB alleges that the defendants violated Regulation O, formerly known as the Mortgage Assistance Relief Services (MARS) Rule, which generally bans mortgage assistance relief service providers from requesting or receiving payment from consumers for mortgage modifications before a consumer has signed a mortgage modification agreement from their lender. It also prohibits deceptive statements and requires certain disclosures when companies market mortgage assistance 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.
The illegal practices alleged in the complaints include:
- Collecting fees before obtaining a loan modification;
- Inflating success rates and likelihood of obtaining a modification;
- Duping consumers into thinking they would receive legal representation; and
- Making false promises about loan modifications to consumers:
Clausen & Cobb Management Company, Inc. and Siringoringo Law Firm
The Bureau filed its complaint against three individuals, Stephen Siringoringo, Alfred Clausen, Joshua Cobb and a corporation, Clausen & Cobb Management Company Inc. (CCMC), for allegedly charging homeowners illegal advance fees for mortgage loan modifications. Their operation charged initial fees ranging from $1,995 to $3,500, in addition to monthly fees of $495, to thousands of California homeowners in distress. The complaint alleges that Clausen, Cobb and CCMC managed, staffed and supported the deceptive loan modification operations of Stephen Siringoringo’s southern California law firm. The California State Bar initially referred the alleged misconduct to the CFPB.
The complaint against Clausen & Cobb Management Company, Inc. et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_clausen-cobb.pdf
The Mortgage Law Group and the Consumer First Legal Group
The CFPB alleges that the Mortgage Law Group (TMLG) and Consumer First Legal Group (CFLG) took in over $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.
The complaint against The Mortgage Law Group et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_cfpb-v-tmlg-et-al.pdf
Hoffman Law Group
The CFPB alleges that since April 2012, the Hoffman Law Group (HLG) enterprise has accepted over $5 million in illegal upfront fees. The Hoffman Law Group sold consumers the chance to join mass lawsuits as a plaintiff and falsely promised them that the lawsuits will help them get mortgage loan modifications or foreclosure relief. HLG typically charged consumers an upfront fee of $6,000 plus a $495 monthly maintenance fee every following month. The bureau alleges that the Hoffman Law Group 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 CFPB’s complaint against the Hoffman Law Group was filed jointly with the attorney general for the state of Florida, who the agency said has been a strong partner in the case. Upon filing their complaint against the Hoffman Law Group, the bureau and the state of Florida sought a temporary restraining order that was issued by the court, freezing the company’s assets and installing a receiver to oversee the business and ensure that the company’s alleged illegal conduct ceases.
The complaint against Hoffman Law Group et al. is available at: http://files.consumerfinance.gov/f/201407_cfpb_complaint_hoffman-law-group-et-al.pdf
The bureau’s complaints are not a finding or ruling that the defendants have actually violated the law.