Quick Answer: Forensic mortgage loan audits are largely illegitimate, as demonstrated by the FTC’s shutdown of multiple companies charging $1,995+ for bogus foreclosure prevention services. The court halted Consumer Advocates Group and related entities after they falsely claimed 95% of mortgages were unenforceable and virtually guaranteed loan modifications.
At the request of the Federal Trade Commission, a U.S. district court has halted an operation that allegedly preyed on financially vulnerable homeowners, convincing them to pay $1,995 or more by holding out bogus promises that they could help them avoid foreclosure and renegotiate their mortgages.
The complaint was filed against Consumer Advocates Group, Paramount Asset Management Corp, National Financial Rescue Corp, National Financial Rescue Group, American Forensic Loan Auditors, Advocates for Consumer Affairs Expert, and Ryan Zimmerman.
The order issued by the court stops the allegedly illegal conduct, freezes the operation’s assets, and appoints a receiver to run the business while the FTC moves forward with the case.
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According to the FTC complaint, the defendants behind the operation claimed on their website that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.” Using this claim, several defendants, including Consumer Advocates Group Experts, LLC, virtually guaranteed that they could get mortgage modifications with reduced interest rates and lower monthly mortgage payments for consumers.
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Calling themselves “Forensic Loan Audit Specialists,” the Defendants claim that CAG has a team of experts that conducts an extensive and thorough examination of consumer loan documents for violations of state and federal laws. Defendants state that “if a note contains state or federal lending violations, the Loan is NOT enforceable.”
Before the site was taken down, the Consumer-Advocates-Group.com site claimed:
A loan audit and its supportive findings provides a common ground where all parties can understand such violations that are evident along with proposed observations of preliminary suspect whereby a valid motion or demand for further discovery presents itself with clarity. This puts you in an offensive position to where we can properly review your financial situation and show your current lender and note holder if there are any violations in your mortgage note. Consumer Advocates Group provides you with the evidence and support you can trust to help you seek better modification terms, restructuring of new terms, principal or rate reduction, or continued discovery. With the greatest potential to alleviate “normal modification” setbacks and re-occurrence of default, qualified and objective evidence helps simplify negotiations and stay using the information and support provided by Consumer Advocates Group.
The defendants offered to review consumers’ mortgage loan documents to determine whether their lenders complied with state and federal mortgage lending laws, and made allegedly false claims that the consumers could use the resulting “forensic audits” to avoid foreclosure and negotiate more favorable terms on their mortgages.
The complaint charges the defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by deceptively telling consumers that they could renegotiate mortgages, making payments substantially more affordable; that they could use the “forensic audits” to negotiate with lenders; and that if they failed to do these things, they would provide a refund. The complaint also charges the defendants with other MARS Rule violations, including collecting fees for mortgage foreclosure rescue and loan modification services before homeowners accept a written offer from their lender or servicer, and failing to make required disclosures.
According to the FTC, the Los Angeles, California-based Consumer Advocates Group Experts, LLC, company owner Ryan Zimmerman, and several other companies he controlled charged from $1,995 to $2,590 for the “forensic audits,” assuring consumers in ads on their website www.consumer-advocates-group.com that, “After our examinations, lenders suddenly get religion and become much more cooperative in renegotiating.”
One of numerous supposed consumer testimonials on the site proclaimed: “They did a wonderful job and saved my home. I received a 3.25% 30 yr fixed … Wells Fargo kept telling me that my loan mod was denied. CAG put together my package in 30 days and got me APPROVED in under 90 days!”
Consumers who wanted to learn more about the defendants’ services were invited to call the toll-free number listed on the defendants’ website, or provide contact information through the site and receive a sales call. According to the complaint, those who followed up were often told:
- to stop contacting the lender because it would hinder the negotiation process and, sometimes, to stop making monthly payments;
- that there was a 100 percent chance that the defendants’ “forensic audits” would uncover violations of federal and state mortgage and credit laws, and that consumers would receive either a loan modification from their lenders or a refund from the defendants; and
- that the defendants’ negotiations with the consumers’ lenders could lower their mortgage payments by 50 percent.
The complaint alleges that consumers often did not receive loan modifications or reduced payments and often found out from their lenders that the defendants either never contacted them, or did contact them but failed to follow up. The complaint also alleges that the defendants routinely failed to answer or return consumers’ telephone calls and emails seeking updates on their mortgage modifications, failed to provide refunds to consumers who requested them, and put consumers at risk of losing their homes and damaging their credit ratings. Consumers often learned too late that their houses were being foreclosed upon, according to the complaint.
In addition to Consumer Advocates Group Experts, LLC and Zimmerman, the complaint names Paramount Asset Management Corporation and Advocates for Consumer Affairs Expert, LLC, as defendants in this case.
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