On Wednesday, a Wisconsin federal judge approved a $39 million judgment against a now-defunct mortgage assistance relief law firm. The settlement resolves CFPB claims that The Mortgage Law Group LLP took advantage of struggling homeowners by tricking them into pay significant fee for loan modification assistance and other services that they never received.
The judge ordered the Mortgage Law Group, which filed for bankruptcy in April 2014, to pay more than $18.3 million in restitution to the CFPB. The Bureau will use the money to compensate the more than 10,000 homeowners who were allegedly victims of the scam.
The Mortgage Law Group must also pay $20.8 million in civil money penalties for alleged violations of federal consumer financial protection laws. Alleged violations include misrepresentations about their services in violation of the Consumer Financial Protection Act and unlawfully collecting advance fees.
According to the settlement, The Mortgage Law Group is also permanently barred from offering any mortgage assistance relief product or service or operating any type of debt relief business in the future.
The action against The Mortgage Law Group was part of a CFPB initiative to crackdown on foreclosure prevention law firms that wrongfully collected fees from struggling homeowners before securing refinancing for their mortgages. Bad actors in this industry often used false advertising and made promises of legal assistance that they never delivered on.
Regulation O, the Mortgage Assistance Relief Services Rule, prohibits foreclosure relief firms from collecting advance fees from consumers before successfully refinancing their mortgages.