Court Issues Temporary Restraining Order Against Mortgage Relief Company

FTC  •  Mortgage

On April 10, the Federal Trade Commission (FTC) announced that the U.S. District Court for the Central District of California had issued a temporary restraining order against a company offering mortgage-relief services to borrowers in financial trouble.  The FTC’s complaint, filed on March 31, alleged that the company violated Section 5(a) of the Federal Trade Commission Act and the Mortgage Assistance Relief Services Rules (Regulation O) by charging borrowers up-front fees of up to $5,000 for the promise of a mortgage modification.  The complaint also alleged that the company frequently failed to obtain the promised mortgage modification, encouraged borrowers to cease mortgage payments, and refused to refund up-front fees despite promising to do so.  The U.S. District Court for the Central District of California found that there was good cause to believe that borrowers would suffer immediate and irreparable harm absent preliminary relief, and that the FTC is likely to succeed on the merits of its claims.  The court’s order prohibited the company from collecting advance fees and misrepresenting the nature of its services, required the company to disable its website, and froze the company’s assets.

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