Posted Jul 23, 2014 09:45 pm CDT
Federal agencies and 15 states have announced a wave of litigation against law firms, attorneys, affiliated companies and others that claimed to perform work on behalf of homeowners struggling to pay their mortgages.
California attorney Stephen Siringoringo; the Florida-based firms Hoffman Law Group and Lanier Law; the Chicago-based Mortgage Law Group (now closed) and its three partners; and the Danielson Law Group in Utah, as well as six principals there, are among the defendants in a so-called Operation Mis-Modification enforcement sweep coordinated by the Consumer Financial Protection Bureau, the Federal Trade Commission and regulators in 15 states including Florida, Illinois and New York, according to the National Law Journal (sub. req.).
Common themes in the 41 suits (the CFPB filed three, the FTC six and states another 32, the NLJ says) are upfront fees charged to homeowners, with little or no meaningful work allegedly provided to them in return.
“The defendants disguised their false promises of foreclosure relief for struggling homeowners with claims that they were performing legal work,” says the CFPB. “These tactics are used by foreclosure relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.”
Such upfront fees are banned by the a federal consumer-protection rule initially adopted by the Federal Trade Commission that is now known as “Regulation O,” the plaintiffs say. They also accuse defendants of misrepresenting to homeowners the mortgage-relief services and benefits they would get for their money.
The states involved in the enforcement sweep are Arizona, Delaware, Florida, Indiana, Illinois, Kansas, Louisiana, Maryland, Michigan, New Mexico, New York, North Carolina, Ohio, Washington and Wisconsin.
ABAJournal.com (2010): “Calif. AG Sues 2 Companies, 3 Attorneys & Others for $60M, Says Homeowners Duped Into Suing Banks”
ABAJournal.com (2013): “Former lawyer enters not guilty plea in alleged mortgage scam”
ABAJournal.com: “Fugitive lawyer among ‘financial thugs’ indicted in record $13.5M loan-modification case, DA says”
Sacramento Bee: “Yuba jury awards homeowner $16 million in mortgage case”
Wall Street Journal (sub. req.): “SunTrust Mortgage Agrees to $320 Million Settlement”