11th Circuit Affirms FTC's $13.5 Million Judgment Against Mortgage Relief Fraudster

by Ballard Spahr LLP
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On November 2, 2017, the U.S. Court of Appeals for the 11th Circuit affirmed a $13.5 million judgment that the FTC obtained against a group of individuals, law firms, and related entities that engaged in a massive nationwide foreclosure avoidance scam. According to the Eleventh Circuit, the defendants offered "mortgage assistance relief services to people in danger of losing their homes to foreclosure." In doing so, the defendants "promised homeowners that in exchange for an upfront fee, they would negotiate more affordable monthly payments, lower interest rates, and reduced principal balances on their behalf." After the consumers paid, the defendants stopped communicating with them, often failed to obtain the promised mortgage relief, and frequently put consumers in a worse position that when they started.

The FTC filed suit against the defendants in the U.S. District Court for the Middle District of Florida. After years of active litigation, in July 2016, the district court granted summary judgment in the FTC's favor. The judgment barred the defendants from offering similar services in the future and prohibited further violations of the Telephone Sales Rule and the Mortgage Assistance Relief Services Rule. It also held the defendants jointly and severally liable for a $13.5 million judgment. The defendants appealed to the Eleventh Circuit, arguing that the district court improperly considered certain evidence in deciding the summary judgment motion. On November 2, 2017, the Eleventh Circuit affirmed the judgment.

While most have focused on the CFPB's enforcement actions, the FTC remains a force to be reckoned with, especially when pursuing perpetrators of mortgage relief fraud. The FTC has a specific webpage relating to mortgage relief fraud with links to enable consumers or legitimate businesses to report possible fraud to the FTC or to state attorney generals.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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