The Consumer Financial Protection Bureau yesterday announced a settlement in an enforcement action that started nearly a decade ago which will see those involved in a foreclosure relief scam pay $12 million in penalties and restitution to consumers.
The Background: The CFPB, the FTC, and 15 states sued the defendants back in 2014, alleging they charged millions of dollars in illegal advance fees to consumers who were facing foreclosure, but never provided any of the services they promised.
- Following a trial in 2017, a District Court judge ordered the defendants to pay $38 million in redress and penalties. The plaintiffs then secured a judgment in 2019 for $37 million, which was appealed. Before the ruling on the appeal could be issued, the two sides announced the settlement.
- The suit was part of a sweep by the regulators against foreclosure relief scammers, many of whom took advantage of consumers following The Great Recession in 2008.
- Among the acts called out when the lawsuits were filed were:
- 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
- Making false promises about loan modifications to consumers
The Settlement: The defendants — Consumer First Legal Group, LLC and four attorneys, Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford — will pay $10.9 million in restitution to consumers and an additional $1.1 million in penalties. The individual defendants were already banned from the mortgage assistance industry for periods ranging from five to eight years.
- Both sides agreed to the settlement to avoid any further delays, and the expense of further litigation, according to the settlement agreement.