According to the American Bar Association Journal Federal agencies and 15 states have announced a wave of litigation against law firms, attorneys, affiliated companies and others that claimed to perform work on behalf of homeowners struggling to pay their mortgages. The states involved in the enforcement sweep are Arizona, Delaware, Florida, Indiana, Illinois, Kansas, Louisiana, Maryland, Michigan, New Mexico, New York, North Carolina, Ohio, Washington and Wisconsin.
Common themes in the 41 suits (the CFPB filed three, the FTC six and states another 32, the NLJ says) are upfront fees charged to homeowners, with little or no meaningful work allegedly provided to them in return. “The defendants disguised their false promises of foreclosure relief for struggling homeowners with claims that they were performing legal work,” says the CFPB. “These tactics are used by foreclosure relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.”