FTC Cracks Down on Loan Mod Shops Falsely Associated with Hope Now

March 24, 2009 No Comments »

no hope

A U.S. district court, at the request of the Federal Trade Commission, has ordered two loan modification companies to stop falsely advertising that they’re affiliated with foreclosure prevention alliance Hope Now.

The two companies in question, “Hope Now Modifications” and “New Hope Modifications”, have been charged by the FTC with violating federal law for claiming they could obtain loan modifications for customers in all or virtually all cases or refund payment if they could not.

In reality, the FTC alleges the pair often diverted one month’s mortgage payment as a fee from at-risk homeowners, failed to help them obtain a modification, and denied any refund.

“Seeking to capitalize on its name, the defendants called their firms New Hope Modifications and Hope Now Modifications, and used telephone numbers that included “HOPE,” to mimic the real HOPE NOW Alliance hotline which is 888-995-HOPE.”

When consumers called the toll-free hotlines, they would be directed to make an upfront fee (red flag), referred to as a “mitigation escrow fee,” before work would begin.

After consumers made the payments, the defendants failed to return calls regarding status, and in many cases, it turned out banks and mortgage lenders had never actually been contacted by the supposed loan modification companies.

“With many consumers desperate for relief and afraid they might lose their homes in these difficult economic times, some unscrupulous individuals prey on these fears for their own financial gain,” said FTC Chairman Jon Leibowitz.

“The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won’t hesitate to take action against these types of con artists now and in the future.”

Both websites associated with the companies in question are “temporarily under construction,” interesting that.

(photo: intangiblearts)

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