By Nicole D. Prysby, J.D.
The Bureau adequately alleged that a foreclosure relief services company and its CEO made deceptive and unsubstantiated representations about their ability to help consumers avoid foreclosures or negotiate loan modifications.
The Consumer Financial Protection Bureau pleaded sufficient facts to support its claims that a foreclosure relief services company and its President and CEO engaged in deceptive and abusive acts, held a federal district court in California. The Bureau alleged that the defendants made deceptive and unsubstantiated representations about their ability to help consumers avoid foreclosures or negotiate loan modifications. The Bureau adequately pleaded claims under the Consumer Financial Protection Act (CFPA) and Regulation O through allegations that the defendants took money from consumers by misleading consumers such that they did not understand the true quality and effectiveness of the purchased services. The defendants allegedly sold audit and litigation documents to consumers with the claim that the documents would uncover information that included defects in the assignment of a consumer’s mortgage and would provide consumers with an effective defense to a foreclosure action or help them obtain loan modifications. In reality, the documents consisted largely of template materials and the defendants used neither experts nor lawyers to prepare the documents. The court also denied a request for enlargement of time to respond to the Bureau’s complaint and allowed counsel for the CEO to withdraw, so that he may proceed pro se (CFPB v. Certified Forensic Loan Auditors, LLC, May 20, 2020, Wright, O.).
The Bureau filed a complaint against Certified Forensic Loan Auditors, LLC (CFLA) and its President and CEO Andrew Lehman, alleging deceptive and abusive acts and practices by the foreclosure relief services company. The defendants marketed and sold services to consumers, including Securitization Audits and litigation documents, which defendants told consumers would provide them an effective defense to a foreclosure action or help them obtain loan modifications. They told consumers that the audits and litigation documents contained specific categories of cutting-edge, advanced analyses, and that would uncover information that included defects in the assignment of a consumer’s mortgage or in the securitization of the consumer’s mortgage. In actuality, the defendants made no effort to determine whether the audits could help a consumer prevent foreclosure or obtain a favorable settlement either based on the consumer’s jurisdiction or the consumer’s circumstances. The audits consisted largely of template materials and contain legal conclusions and recommendations to the borrower. The defendants used neither experts to perform the audits nor lawyers to prepare the audits and litigation documents. They charged and collected $1,495 from consumers prior to producing and delivering the documents and ultimately sold the documents to more than 2,000 consumers.
The Bureau alleged that the defendants violated the CFPA and Regulation O. The defendants motioned to dismiss the claims.
The court rejected all arguments brought by the defendants regarding dismissal of the claims. The Bureau may bring enforcement actions, as it is a constitutionally permissible agency. The defendants are covered by the CFPA and Regulation O, based on their claims to consumers that their audit and litigation documents would prevent foreclosure or modify the terms of mortgages. The defendants argued the Bureau failed to plead facts establishing a substantial injury to consumers or that the injury is not outweighed by countervailing benefits to homeowners. But the substantial injury and countervailing benefits are elements to an unfairness claim, not to the deceptive and abusive practices claims that the Bureau pleaded. The court also rejected the defendants’ argument that the Bureau cannot assert a deceptive and abusive practices claim because they did not take unreasonable advantage of consumers. The Bureau made sufficient allegations that Defendants took money from consumers by misleading consumers such that they did not understand the true quality and effectiveness of the purchased services. For example, the defendants allegedly falsely told consumers that the audits and litigation documents would contain certain specific categories of cutting-edge, advanced analyses, and that the audits would uncover information that included defects in the assignment or securitization of a consumer’s mortgage.
The court also denied the defendants’ request for enlargement of time to answer the complaint and allowed Lehman’s counsel to withdraw. Lehman will be allowed to proceed pro se, as it will not cause a delay in the proceedings and he wishes to independently run his own defense.
This case is No. 2:19-cv-07722-ODW-JEM.
Attorneys: Benjamin Vaughn for the CFPB. Maryam Atighechi (Atighechi Law Group APC) for Certified Forensic Loan Auditors, LLC.
Companies: Certified Forensic Loan Auditors, LLC
MainStory: TopStory CaliforniaNews CFPB EnforcementActions Loans Mortgages UDAAP
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