Daily Briefing

DAILY BRIEFING

July 17, 2009

FTC, 19 states act to stop sham loan consultants

LOS ANGELES - Prosecutors in Maryland and nationwide filed 189 legal actions Wednesday against loan modification consultants accused of bilking homeowners who are desperate to make their mortgage payments more affordable. The lawsuits and cease-and-desist orders announced by Federal Trade Commission Chairman Jon Leibowitz and California Attorney General Edmund G. Brown were part of a nationwide sweep of alleged sham consultants by the federal agency and officials in 19 states. Maryland announced orders against 17 loan consultants with dates ranging from March 6 to Wednesday. The lawsuits seek millions of dollars in civil penalties, restitution for victims and a permanent injunction to keep the companies and the defendants from offering mortgage-relief services. Leibowitz said the FTC was working on rules that would prohibit a mortgage modification service from accepting upfront payments. He said he hoped to have the regulations in place by the end of this year. In the meantime, officials urged borrowers having trouble making mortgage payments to avoid foreclosure counselors that demand upfront fees. Homeowners should never redirect mortgage payments to consultants who promise to pass the money on to lenders, the officials said. The Department of Housing and Urban Development can also provide referrals to approved counselors, many of whom offer free services.

- Associated Press

Rosecroft owner loses court battle over simulcast

The bankrupt owner of Rosecroft Raceway has lost a legal fight to regain thoroughbred simulcast signals after a federal judge on Wednesday denied the track's request for a temporary restraining order against the Maryland thoroughbred industry and others. Rosecroft's owner, Cloverleaf Enterprises Inc., filed a lawsuit this month against the Maryland Thoroughbred Horsemen's Association, the Maryland Horse Breeders Association and other defendants, alleging that they are interfering with Rosecroft's simulcast agreements with out-of-state tracks and seeking $20 million in damages. Cloverleaf also had asked for a temporary restraining order and a preliminary injunction that would order Maryland's two thoroughbred industry groups to stop interfering with Rosecroft's simulcast agreements and direct the out-of-state racetracks to restore the signals. The lawsuit stems from Rosecroft's battle with the state's thoroughbred industry over an agreement that requires the track to pay $5.9 million a year to receive simulcast signals for thoroughbred racing. Rosecroft has not made a payment since January and owes more than $2 million. Rosecroft, which had been seeking a new deal, filed for bankruptcy protection in June. The stockholders of Rosecroft Raceway have approved the sale of the harness track to a former owner.

- Hanah Cho

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