A U.S. District Court Judge has temporarily halted an allegedly deceptive mortgage assistance relief operation lured homeowners with promises that it could provide mortgage relief assistance under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The order, entered in the U.S. District Court for the Central District of California, was issued at the request of the FTC.
“The court granted a temporary restraining order against National Amendment Assistance (also doing business as N.A.A.) after the mortgage assistance relief operator and related entities allegedly misled consumers into paying unlawful upfront fees in exchange for guarantees of lower mortgage rates and monthly payments that never materialized,” the FTC said, in a statement.
“When Americans look for ways to cut costs and lower their monthly bills, they shouldn’t have to worry about being targeted by mortgage scammers,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said.
The FTC complaint states that since at least 2022, Southern California-based companies steered by certain individuals “have mailed letters to homeowners nationwide claiming to offer mortgage relief under the CARES Act. These letters claim that consumers can obtain a reduction in their home mortgage rate due to a special mortgage adjustment program connected to a ‘CARES-Act Homeowner Assistance Fund or Lender Specific In-house Mortgage Adjustment Program’ and urge the consumer to call a phone number to learn more.” The complaint notes that the letters provide specific terms for the mortgage modification that the consumer is allegedly eligible to obtain, including a lower mortgage rate and monthly mortgage payment.”
The defendants also allegedly misrepresent that consumers have a “grace period,” during which they are not required to pay their mortgage, according to the complaint.
The FTC contends that these promises are false. “Ultimately, the defendants do not obtain any mortgage relief for consumers and simply walk away with consumers’ upfront fees and financial information. Consumers—many of whom are often already in financial distress—have lost the money they paid to the defendants and have fallen behind on their mortgage payments, with some facing foreclosure or default.”
Specifically, the complaint alleges that the defendants violated the law by deceptively:
- “Promising mortgage loan modifications that will make consumers’ payments more affordable;
- Claiming their mortgage assistance relief services are associated with a federal government homeowner assistance plan;
- Instructing consumers that they do not have to or should not make monthly payments toward their mortgage;
- Collecting upfront payments before consumers executed a written agreement between the consumer and the loan holder or servicer; and
- Making false statements to induce consumers to provide the defendants with customer information of a financial institution, in violation of the Gramm-Leach-Bliley (GLB) Act.”
The complaint contends that the defendants have violated the FTC Act, Mortgage Assistance Relief Services (MARS) Rule, and the GLB Act. The FTC seeks redress for affected consumers.
Among other provisions, the MARS Rule provides that it is a violation of the Rule for a mortgage assistance relief service provider to engage in the following conduct:
- Misrepresenting, expressly or by implication, any material aspect of any mortgage assistance relief service, including but not limited to:
- The likelihood of negotiating, obtaining, or arranging any represented service or result.
- The amount of time it will take the mortgage assistance relief service provider to accomplish any represented service or result.
- That a mortgage assistance relief service is affiliated with, endorsed or approved by, or otherwise associated with a government entity or governmental homeowner assistance plan.
- The consumer’s obligation to make scheduled periodic payments or any other payments pursuant to the terms of their mortgage loan.
- The amount of money or the percentage of the debt amount that a consumer may save by using the mortgage assistance relief service.
- Request or receive payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s mortgage loan holder or servicer incorporating the offer of mortgage assistance relief the provider obtained from the consumer’s mortgage loan holder or servicer.