Homeowners are being warned not to fall for schemes claiming to give mortgage debt relief.
A federal judge has banned a group of companies from providing mortgage debt relief services after the government said they misled homeowners with false promises.
The Federal Trade Commission said more than 6,000 people using the services were ripped off.
“These are people who are trying to save their homes,” FTC attorney Jason Schall said. “People who are often facing foreclosure.”
Schall said homeowners would give upfront fees of as much as $3,900.
The lawsuit lists several companies including Consumer Defense LLC based in Utah.
The FTC said the companies must pay back $18.5 million.
"They were promising people they would save tons of money and keep their house,” Schall said.
Instead, the FTC said consumers discovered the companies either never completed the loan modification process or never contacted the original lender.
Schall said it’s illegal to demand upfront fees from debt relief consumers and warns homeowners to be on the lookout for potential scammers.
"It’s a red flag if a mortgage modification company says not to talk to your lender or if they try to collect upfront fees,” Schall said.
Cox Media Group tried contacting the owners of the companies, but the businesses are listed as being shut down.
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