Shutters brought down on mortgage foreclosure racket
A bogus mortgage foreclosure prevention operation that traded in misery has been shut down by a US court.
The court acted in an action brought by the Federal Trade Commission against Freedom Foreclosure Prevention Services, Loss Mitigation Training Center of America, Jeffrey C. Segal, and Michael R. Workman. The defendants offered to help families in danger of losing their homes after missing mortgage payments.
In exchange for the equivalent of one month’s mortgage payment, the applicants offered a "loss mitigation" service that they claimed was able to prevent foreclosure in 97 percent of cases by securing loans on revised terms. Applicants were cynically advised not to consult with lenders, at the supposed risk of losing a "money-back guarantee."
In reality, according to an FTC complaint, loan modification were completed in only six per cent of cases and applicants were routinely stonewalled when they attempted to claim refunds.
According to the FTC's complaint, the defendants also claimed that self-employed consultants could earn up to $6,000 a month selling their services - providing they paid $1,500 up front for a "loss mitigation business opportunity" starter kit. Wages would be earned, it was claimed, by referring homeowners to the defendants and by recruiting new consultants. However, no consultant ever earned the claimed income at any point between November 2003 and January 2009.
Freedom Foreclosure Prevention Services and later Loss Mitigation Training Center of America were allegedly both run by Segal. Each firm touted for consultants through its web site. Segal also allegedly used email marketing in an attempt to persuade former Freedom Foreclosure workers to work for the Loss Mitigation Training Center, an almost identical business that picked up the baton from Freedom Foreclosure around the start of the year.
Freedom Foreclosure Prevention Services and Loss Mitigation Training Center of America were held in violation of multiple counts of the FTC Act which bans deceptive trading practices. The US District Court for the District of Arizona granted a preliminary injunction against the defendants last week after imposing a temporary restraining order last month. The FTC plans to chase the four defendants in the case for damages. ®