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Financial Services Law Insights and Observations

Foreclosure relief operation ordered to pay $40,000 penalty in CFPB action

Courts CFPB Enforcement CFPA UDAAP Regulation O Foreclosure Civil Money Penalties

Courts

On July 23, the CFPB announced that the U.S. District Court for the Central District of California entered a stipulated final judgment and order against a foreclosure relief services company, along with the company’s president/CEO (defendants), resolving CFPB allegations that the defendants engaged in deceptive and abusive acts and practices in connection with the marketing and sale of purported financial-advisory and mortgage-assistance-relief services to consumers. As previously covered by InfoBytes, in September 2019, the CFPB filed a complaint alleging that since 2014, the defendants violated the Consumer Financial Protection Act (CFPA) and Regulation O by, among other things, making deceptive and unsubstantiated representations about the efficacy and material aspects of its mortgage assistance relief services, as well as making misleading or false claims about the experience and qualifications of its employees. The Bureau also alleged the defendants’ misrepresentations constituted abusive acts and practices because consumers “generally did not understand and were not in a position to evaluate the accuracy of [the defendants’] marketing representations or the quality of the mortgage-assistance-relief services that [the defendants] sold.” Moreover, the Bureau claimed the defendants further violated Regulation O by charging consumers advance fees before rendering services.

The stipulated final judgment suspends $3 million in consumer redress based upon the defendants’ sworn financial statements and disclosures of material assets that detailed their inability to pay, but orders the defendants to pay $40,000 in civil money penalties. Additionally, the judgment permanently restrains the defendants from offering mortgage relief and financial advisory services and subjects the defendants to certain reporting and recordkeeping requirements.

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