Courts Shut Down 'Forensic Audit' Company
Consumer Advocates Group claimed it could help financially-troubled homeowners
Thursday, June 14, 2012
A federal court has shut down a company that sold "forensic audits" that would supposedly help troubled homeowners avoid foreclosure.
The Federal Trade Commission (FTC) charged that California-based Consumer Advocates Group Experts, LLC, charged from $1,995 to $2,590 for the 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.”
According to the FTC complaint, the company's website claimed 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, the defendants "virtually guaranteed that they could get mortgage modifications with reduced interest rates and lower monthly mortgage payments," the agency charged.
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.
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.