The Federal Trade Commission mailed 17,213 refund checks totaling more than $1 million to consumers who were deceived by Residential Relief Foundation, an operation that charged a $1,500 upfront fee for bogus mortgage relief services and posed as a government mortgage assistance program.
Under a settlement entered by the court in 2011 as part of an FTC crackdown on scams against homeowners behind in their mortgage payments or facing foreclosure, the defendants were banned from selling debt relief services.
In a November 2010 complaint, the FTC alleged the defendants violated federal law by falsely claiming their loan modification program could lead to the waiver of late mortgage payments, late fees and legal fees; the conversion of adjustable mortgage rates to fixed rates as low as 1%; the reduction of consumers’ principal balance; and up to 40% lower mortgage payments.
The Residential Relief defendants used a logo similar to the Great Seal of the United States to market their products, according to the FTC. The defendants allegedly also improperly disposed of consumers’ information in unsecured dumpsters in violation of their own privacy policies.
The defendants, according to the FTC, engaged in the conduct amid the publicity surrounding the availability of free mortgage loan assistance and modification programs, including the Home Affordable Modification Program (HAMP) implemented by the federal government under the Troubled Asset Relief Program (TARP).