Bogus Mortgage Modifiers Fined Nearly $19 Million

Mortgage A trio of con artists will pay $18.8 million to settle Federal Trade Commission charges that they and their company swindled homeowners struggling to make their mortgage payments.

Sean Zausner, David Zausner, David J. Feingold and First Universal Lending LLC were accused by the FTC of preying upon destitute homeowners with lies about their ability to negotiate more affordable mortgages.

In addition to the nearly $19 million penalty, a federal court also banned the defendants, all of Palm Beach Gardens, Fla., from the mortgage modification business.First Universal Lending and its owners were sued by the FTC in November 2009 as part of Project Stolen Hope, an ongoing federal and state crackdown on mortgage foreclosure rescue and loan modification scams.

Until it was shut down by the FTC, First Universal Lending claimed via its website and unsolicited calls to distressed homeowners that it would negotiate mortgage modifications with lenders to reduce homeowners' monthly mortgage payments.

According to the FTC's complaint, the defendants convinced hapless homeowners to stop making their monthly mortgage payments, claiming -- falsely -- lenders would refuse to negotiate unless they fell at least a few months behind in their payments.

After forcing desperate consumers to scrape together $7,000 in up-front fees -- fees which are now illegal -- the defendants usually did little or nothing to help reduce their payments, the FTC charged. Besides getting nothing for their money, First Universal Lending's victims also landed in hot water with their lenders for falling behind in their payments.

Once the FTC sued the scammers, a court subsequently halted the defendants' operation, froze their assets and ordered them to disable their websites.

Besides the $18.8 million penalty, the settlement orderbars the defendants from the mortgage relief services business and prohibits them from misrepresenting facts about any good or service. The settlement also bans them from selling or using customers' personal information, failing to properly dispose of their information, and collecting any other payments from customers.

The FTC urges consumers to report foreclosure rescue and mortgage modification scams to or by calling (877) FTC-HELP. The FTC makes those complaints available to federal, state, and local law enforcement through the Consumer Sentinel Network.
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