Mortgage relief companies ordered to pay $18.5 million to misled homeowners

WASHINGTON, DC — 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 were ripped off using the services.

“These are people who are trying to save their homes,” said FTC attorney Jason Schall. “People who are often facing foreclosure.”

Schall said homeowners would give upfront fees as much as $3,900.

The lawsuit lists several companies including Consumer Defense LLC., based in Utah, and 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 at all.

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.

We tried contacting the owners of the companies, but the businesses are listed as being shut down.