Court Grants Request to Temporarily Stop Loan Modification Company’s Up-Front Fees
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Court Grants Request to Temporarily Stop Loan Modification Company’s Up-Front Fees

TALLAHASSEE, FL – February 25, 2009 – (RealEstateRama) — Attorney General Bill McCollum today announced that his office has obtained a court order temporarily prohibiting an Orlando loan modification company from charging up-front fees to homeowners for loan modification services. According to the order issued by the Orange County Circuit Court, FMA Servicing, Inc. is barred from charging homeowners any fee in advance of providing loan modification services. FMA Servicing must comply with written notice requirements contained in the Foreclosure Rescue Fraud Prevention Act.

The Attorney General’s Economic Crimes Division opened its investigation into FMA Servicing in December and filed a lawsuit against the company earlier this month. The investigation revealed FMA Servicing, which does business under the name Financial Management Advisors, charges an up-front fee as high as $2,500 to homeowners seeking loan modification services. The company subsequently refused to change its business practices even after receiving notification of the Foreclosure Fraud Rescue Prevention Act which took effect on October 1, 2008.

The lawsuit alleges violations of the Foreclosure Fraud Rescue Prevention Act, as well as false and misleading advertising and other deceptive and unfair trade practices. The injunction against FMA Servicing will remain in effect until the resolution of the case. No further hearings are set at this time. Consumers affected by these or other practices may file a complaint online at http://www.myfloridalegal.com or may call the fraud hotline at 1-866-966-7226.

The Foreclosure Fraud Rescue Prevention Act, Florida Statutes 501.1377, 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.

The Attorney General’s statewide offices continue to review the practices of many companies providing foreclosure-related rescue services to ensure that they are in compliance with the new law. Homeowners should exercise caution when seeking help to prevent mortgage foreclosure. Generally, homeowners should first attempt to negotiate with their lender before turning to outside help. More helpful hints for homeowners can be found at http://myfloridalegal.com/pages.nsf/Main/55BC21CB13128F728525741800481491

Contact: Sandi Copes Phone: (850) 245-0150

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