$25m in illegal advance fees, and $6,000 to lose a house

Why this case matters

It is the clearest statement of the economics, and the economics are obscene in a way that is easy to miss.

$1,995 to $6,000 up front. Then $495 a month.

Charged to people whose defining characteristic is that they cannot pay their mortgage.

A homeowner three payments behind does not have six thousand dollars. Finding it means borrowing, cashing out a pension, taking from a relative, or — most commonly — not paying the mortgage. The fee is not paid out of spare money, because there is none. It is paid out of the very thing it was supposed to protect.

Why 41 actions at once

Three CFPB lawsuits, six FTC cases and 32 state actions across 15 states.

That coordinated-sweep shape recurs across this site — moving companies, phantom debt — and it means the same thing every time: many small operators, each individually beneath the threshold at which a federal case is worth bringing alone.

Mortgage relief adds a jurisdictional reason too. Real estate, foreclosure procedure and the practice of law are all state matters, while the advance-fee rule is federal. Neither level reaches the whole of the conduct on its own.

“Exploited attorney credentials”

The detail that separates this scheme from ordinary advance-fee fraud.

Some of these operations were, or claimed to be, law firms — and a lawyer occupies a position that a consumer-protection rule struggles to reach. Legal fees are legitimately paid in advance. Attorney-client privilege discourages questions. A law firm telling you to stop talking to your lender sounds like strategy rather than sabotage.

That is why the FTC’s consumer guidance singles out forensic loan audits — a service dressed as legal analysis, promising to find violations in the paperwork that will cancel or reduce the loan. The audit is real work in the sense that documents are looked at. It just does not do anything.

The other three variants

The FTC’s guidance lists the rest of the family, and they escalate:

Phony counselling — impersonating housing counsellors or lawyers, taking a fee, and telling the homeowner to stop contacting the lender and send the mortgage payments to them instead.

Deed transfer — persuading the homeowner to sign over the deed. Once given up, the scammers control what happens to the house.

Equity-skimming — buying the home below market value and renting it back, while pocketing the payments during the foreclosure.

The first takes a fee. The last two take the house.

The caveat

These were actions filed, not outcomes. The figures above — the $25 million, the fee structure, the failures to contact lenders — are the agencies’ allegations at the point of suing, and each of the 41 matters was decided separately afterwards. Individual defendants are presumed innocent of anything charged criminally, and civil allegations are resolved by a court or by settlement.

We include the sweep because the fee structure it documents is the clearest available description of how this scheme is priced, and because no comparable figure has been published since.