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Terry Goddard Files Lawsuit against Loan Modification Company, Obtains Temporary Restraining Order to Protect Homeowners

(Phoenix, Ariz. - June 3, 2010) Attorney General Terry Goddard has filed a lawsuit against Discount Mortgage Relief and Mortgage Relief, LLC, (DMR/MR), based in Scottsdale, and its owners for engaging in allegedly deceptive loan modification services.

The Attorney General’s Office also secured a Temporary Restraining Order that prevents DMR/MR from charging or receiving money for loan modification services and from advertising its services.  A hearing is scheduled for Friday, June 4, to allow Maricopa County Superior Court to determine if this temporary Order should remain in effect.

According to court documents, the number of victims may number in the thousands.       

“I am committed to fighting deceptive practices targeted at homeowners who are struggling to make their payments,” Goddard said.  “Instead of providing assistance, many loan modification companies have been pocketing large upfront fees and failing to obtain any kind of mortgage relief for homeowners. In this past legislative session, my Office championed the passage of SB 1130, which prohibits foreclosure consultants from receiving fees before they provide loan modification or other services.”

The new law prohibiting consultants from collecting upfront fees takes effect July 29. 

The lawsuit alleges that at least since July 2009, DMR/MR deceived consumers into paying thousands of dollars for mortgage loan modification services by misrepresenting the company’s ability to help them obtain mortgage relief and save their homes, thereby violating the Arizona Consumer Fraud Act.   

Consumers allegedly paid DMR/MR between approximately $1,350 and $5,000 for loan modification services and were guaranteed results by the company.  

The lawsuit alleges that Discount Mortgage Relief and Mortgage Relief, LLC. violated the Arizona Consumer Fraud Act by: 

  • Misleading consumers into believing they were pre-qualified and guaranteed to receive a loan modification through the company’s services. 
  • Falsely promising favorable results and telling consumers that any foreclosure proceedings against their homes would stop once they hired the company.
  • Misrepresenting that the company used attorneys to negotiate consumers’ loan modifications.
  • Falsely stating that they were associated with or acting on behalf of the government and associated with or acting on behalf of the consumer’s lender.
  • Falsely stating that the company was “FBI certified”.
  • Misrepresenting the nature of the company’s loan modification services by referring to them as forensic loan documentation audits or analyses.
  • Falsely promising consumers that they would receive a refund of fees if the company failed to get them a loan modification and failing to return fees to some consumers who decided not to hire the company and never signed a contract.

In the lawsuit, Goddard asks the court to order Discount Mortgage Relief/Mortgage Relief to:

  • Refrain from violating the Arizona Consumer Fraud Act. 
  • Pay full restitution to all homeowners who paid Discount Mortgage Relief/Mortgage Relief for loan modification services.
  • Pay a civil penalty of up to $10,000 for each violation of the Consumer Fraud Act.
  • Reimburse the Attorney General’s Office for its costs in this matter.  

This case is being handled by Assistant Attorney General Cherie Howe.

The Attorney General recommends that homeowners who are in or facing foreclosure seek assistance promptly from their mortgage lender or servicer or a government-approved housing counselor. Federal, state and local governments offer numerous free resources for distressed homeowners, including the Arizona Foreclosure Help-Line at 1.877.448.1211.  The Help-Line refers consumers to HUD-approved housing counseling agencies who provide loan modification and other services at no cost.   Additional information for homeowners is available at http://www.hud.gov . 

For additional information, contact Molly Edwards at (602) 542-8019.

A copy of the complaint and Temporary Restraining Order are attached.