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.
