A series of “law firms” and the individuals who did business on their behalf are now banned from operating in the mortgage business, after the Federal Trade Commission found that the companies were falsely promising financially distressed homeowners they would receive legal representation to prevent foreclosure or lower their mortgage payments and interest rates.

Typically, mortgage justice comes from the Securities and Exchange Commission; it's a rarity for the FTC to step in.

According to the FTC, Edward William Rennick III, Surety Law Group and Redstone Law Group agreed to be banned from selling secured and unsecured debt relief products or services, prohibited from misrepresenting any financial products and services, and from violating the Do Not Call Registry rules, as part of a settlement.

The settlement also includes an $8 million judgment that will be suspended upon surrender of frozen assets, the FTC said.

Additionally, the FTC said that the United States District Court for the Middle District of Florida Jacksonville Division also issued a summary judgment against Michael Lanier, Rogelio Robles, Lanier Law, Fortress Law Group, Fortress Law Group and Liberty & Trust Law Group of Florida for violations of the FTC Act and the Mortgage Assistance Relief Services Rule.

The FTC alleged that the individuals involved typically told consumers they would get a loan modification or assured them that their chance of getting one was between 85% and 100%.

In exchange for the “promise” of a mortgage modification, the individuals collected up to $4,000 in advance, and sometimes an ongoing monthly fee of $300 or more from the struggling borrowers.

In some cases, they told people not to pay their mortgages while their supposed loan modifications were pending, and falsely claimed that, by auditing their mortgage documents for lender errors or lender fraud, they would be able to convince the lenders to modify the consumers’ home loans.

While Rennick, Surety Law Group and Redstone Law Group agreed to the punishments, the remaining parties were subject to a court’s decision.

According to the FTC, the court’s summary judgment order found the facts of the case “indisputable,” including:

  • Members of the operation made numerous misrepresentations to consumers
  • The companies operated as “law firms” via agreements with lawyers in various states who did little or no actual legal work for the defendants’ clients
  • Some attorneys’ names and signatures were used on documents without their authorization
  • Consumers stated that despite being led to believe that a lawyer would work on their case, many never spoke to one, never got a lawyer’s name, and never saw anything to suggest that a lawyer had done any work for them
  • Some consumers who began paying the defendants stopped hearing from them
  • Some consumers who contacted their lenders directly were told no paperwork had come from the defendants
  • Some consumers received mortgage modifications, but not on the terms they were promised, and sometimes with a higher monthly payment than they had been paying

The terms of Rennick, Surety Law Group and Redstone Law Group’s settlement are the same as the terms imposed on the remaining parties by the court, the FTC said.

Additionally, the summary judgment also includes a judgment of more than $13.5 million, which represents the individuals’ net revenues.

The orders also bar the individuals from profiting from customers’ personal information and failing to dispose of it properly.