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Financial Services Law Insights and Observations

FTC, California, Missouri Announce Settlement with Mortgage Foreclosure Rescue Services Companies

State Issues

On March 22, the Federal Trade Commission (FTC) and the states of California and Missouri announced a settlement with two mortgage foreclosure “rescue” businesses and three related individuals alleged to have made false claims regarding the services that they provided and offered to consumers, and who allegedly violated state laws by charging advance fees for foreclosure consulting services. The settlement agreement (i) broadly prohibits the defendants from making misrepresentations regarding goods and services, (ii) bars the defendants from enforcing contracts with their customers or selling their customers’ personal information, and (iii) bans the defendants from selling mortgage loan modification and foreclosure relief services. The court order approving the settlement also imposes civil money penalties on each individual defendant, respectively. Two additional defendants remain and have been charged with falsely claiming that a lawyer would negotiate the terms of any loan modification and falsely promising a refund in the event of failure.