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State, CFPB win Judgment against Florida Loan Mod Scheme
A Florida law firm and its several affiliates which hadrnalready been shuttered by the State of Florida and the Consumer FinancialrnProtection Bureau (CFPB) were ordered on Friday to pay a total of $27.7 million</bin damages and penalties.</p
The judgment arose out of a lawsuit filed by CFPB and thernFlorida Attorney General against Hoffman Law Group (formerly ResidentialrnLitigation Group) and its operators Michael Harper, Benn Willcox, and attorneyrnMarc Hoffman and affiliated companies operating as Nationwide ManagementrnSolutions, Legal Intake Solutions, File Intake Solutions, and BM MarketingrnGroup, all based in North Palm Beach, Florida. rnThe Hoffman Law Group was allegedly set up to create the perception thatrnconsumers who were trying to save their homes from foreclosure would receivernspecialized legal help. The otherrncompanies, which were run by Harper and Willcox, did marketing and support forrnthe scheme.</p
Thernlawsuit alleged that the defendants had promised to assist financiallyrndistressed consumers in obtaining mortgage loan modifications. The firms’rnmarketing materials misrepresented their ability to help consumers obtainrnsubstantially lower mortgage payments and duped consumers into thinking theyrnwould receive legal representation, In addition the companies collected advancernpayments from consumers before obtaining a loan modification which is arnviolation of Regulation O, formerly known as the Mortgage Assistance ReliefrnServices (MARS) rule, and Florida state law. rnUltimately many of the affected consumers did not receive a modificationrnat all and ended up worse off than they began. </p
The companies also discouragedrnconsumers from talking directly with their lenders and directed them to makernmortgage payments to the Hoffman companies rather than their mortgage lenders ostensibly to betterrndemonstrate financial hardship. </p
The companies had been order to cease operation and were placedrnin receivership in July 2014. Thernreceivership estate belonging to the company and related individuals ofrn$655,737 minus administrative and other expenses will be used for redress forrnvictims. Although the court found the defendantsrnliable for $11,730,579-the full amount of illegal fees paid by approximatelyrn2,000 affected consumers-it suspended the balance of the judgment beyond thernamount in the receivership estate as uncollectable. </p
The judgment also includes:</p<ul class="unIndentedList"<liAuctioning of personal effects ofrnHarper, Willcox, and Hoffman with proceeds paid to the receivership estate. </li<liPayment of $16 million in civil andrnstate penalties including a $10 million civil penalty for the violations of Regulation Ornand a $6 million state penalty for violation of the Florida Deceptive andrnUnfair Trade Practices Act. Although thernreceivership estate does not currently have enough funds to pay those penaltiesrnthe individual defendants were also required to pay penalties under thernstipulated judgment.</li</ul<ul type="disc"
CFPBrnDirector Richard Cordray said, “These companies preyed on vulnerable consumersrnwho were trying to save their homes from foreclosure. The false promises made by these companiesrnlured struggling homeowners into scams that led to greater financial hardship.rnWe are working to protect consumers from illegal predatory practices by holdingrnbad actors accountable for their actions.”
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