FMA Servicing, Inc, Orlando, Florida, which does business under the name Financial Management Advisors, has been sued by Florida Attorney General Bill McCollum and the Economic Crimes Division. The AG filed the lawsuit against FMA for allegedly providing loan modification services to homeowners facing foreclosure – the first lawsuit filed under the new Foreclosure Rescue Fraud Prevention Act.
According to the lawsuit filed in Orange County, Florida, FMA and its owners are in violation of the law which, among other provisions, prohibits a company providing foreclosure-related rescue services from charging consumers any up-front fee. FMA allegedly charges an up-front fee as high as $2,500 to homeowners seeking loan modification services. Additionally, the lawsuit claims the company misrepresented relationships with lenders and falsely advertised the presence of attorneys and certified public accountants on staff. The Attorney General has also filed a motion seeking to temporarily prevent FMA from charging up-front fees.
The lawsuit specifically requests the Court grant a permanent injunction prohibiting FMA from charging up-front fees and order the company to pay restitution on behalf of affected consumers, civil penalties of $10,000 for each violation, and reimbursement for costs related to the investigation and litigation.
Florida Statutes 501.1377, which took effect on October 1, 2008, protects homeowners who are in foreclosure or nearing foreclosure from companies offering potentially fraudulent foreclosure “rescue” services. Specifically, the statute governs companies providing foreclosure-related rescue services including loan modification and short sale services. These companies are prohibited from charging homeowners an up-front fee for these services and must provide homeowners with a written agreement. The law was one of the Attorney General’s legislative priorities during the 2008 Legislative Session.
“Companies and individuals who target homeowners in potentially desperate situations should not be operating in our state,” said Attorney General McCollum. “Florida will not tolerate businesses that prey upon those on the verge of foreclosure.”
The Attorney General’s Office is reviewing the practices of companies statewide providing foreclosure-related rescue services to ensure the companies are in compliance with the new law. Homeowners should exercise caution when seeking help to prevent mortgage foreclosure and should generally first attempt to negotiate with their lender before turning to outside help. More helpful hints for homeowners can be found online at: http://myfloridalegal.com/pages.nsf/Main/55BC21CB13128F728525741800481491.
Consumers affected by these practices may file a complaint by visiting the Attorney General’s website at http://www.myfloridalegal.com or calling the fraud hotline at 1-866-966-7226.