Consumer Bureau Action Tracker

CFPB v. National Legal Help Center; CFPB v. Chance Edward Gordon d/b/a Gordon & Associates , Abraham Michael Pessar et al.


State

Nationwide

target

National Legal Help Center, Najia Jalan, Richard K. Nelson

Topics

Enforcement, Debt Relief, Mortgages

In 2012, the CFPB sued the National Legal Help Center and Chance Gordon and his law firm, Gordon & Associates, for “loan modification scams” that allegedly charged homeowners to reduce their mortgage payments with “little, if any, meaningful assistance to modify homeowners’ mortgage loans or prevent foreclosure,” which is a “violation of federal law.” The CFPB alleged that the organizations “illegally charged large upfront fees, deceptively claimed to be affiliated with government agencies and/or programs, misrepresented that they would secure loan modifications for borrowers and instructed borrowers to stop paying their mortgages and stop communicating with lenders” resulting in clients losing their homes and damage their credit ratings. The two mortgage loan modification scams “took in more than $10 million” and “ripped off thousands” of homeowners. The U.S. District judge “temporarily froze the defendants’ assets and put a receiver in charge of their records and bank accounts.”

  • “The Consumer Financial Protection Bureau on Tuesday announced actions to halt two alleged mortgage loan modification scams the bureau said ripped off thousands of struggling homeowners. In total, the operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.”

The CFPB alleged that the organizations “illegally charged large upfront fees, deceptively claimed to be affiliated with government agencies and/or programs, misrepresented that they would secure loan modifications for borrowers and instructed borrowers to stop paying their mortgages and stop communicating with lenders.”

“The CFPB also allege[d] that, after pocketing thousands of dollars in illegal fees from one distressed homeowner after another, the defendants in both cases typically stopped returning consumers’ phone calls and emails. In the end, many consumers learned that the defendants had not contacted their lenders or obtained any meaningful relief for them.” [Heather Anderson, “CFPB Legal Action Halts Two Alleged California Mortgage Scammers,” Credit Union Times, 12/11/12]

  • The CFPB filed a lawsuit against National Legal Help Center in US District Court Central District of California. The case is still open. [CFPB v. National Legal Help Center, case no. 8:12-cv-02088-AG-AN(x), filed 12/03/12]
  • The CFPB accused a California “loan modification shop” of fraud and obtained a court order shutting it down.” The CFPB claimed the National Legal Help Center “charged advance fees of $1,000 to $3,000 — and in some cases close to $10,000 — for loan modification services,” which is a violation of federal and state law.

The defendants, Najia Jalan, Richard Nelson, and National Legal Help Center, “operated 165 web addresses, many of which mimicked federal housing relief programs.” In 2012, the OCC issued a warning on its website stating that the National Legal Help Center “does not appear to be legitimate and is likely an ‘up front-fee’ scam.” The CFPB claimed the National Legal Help Center told its clients to “stop talking with their lenders and to ignore foreclosure notices” and to “stop paying their mortgage.” This resulted in clients losing their homes and damage their credit rating.

The National Legal Help Center “advertised in all 50 states.” The U.S. District judge “issued a temporary restraining order and appointed a temporary receiver.” [Ronald Campbell, “Feds Shut Down Santa Ana Loan Mod Shop,” The Orange County Register, 12/11/12]

  • The CFPB filed a lawsuit against Chance Edward Gordon, Gordon & Associates, and Abraham Michael Pessar in US District Court Central District of California. The case is still open. [CFPB v. Gordon & Associates, case no. 2:12-cv-06147-RSWL-MRWx, filed 07/18/12]
  • The CFPB shut down what it called a “loan modification scam” in its first-ever lawsuit. The U.S. District judge “temporarily froze the defendants’ assets and put a receiver in charge of their records and bank accounts.” [Ronald Campbell, “Consumer Bureau Sues, Shuts Loan Mod Shop,” The Orange County Register, 08/08/12]
  • The suit accused Chance Gordon and his law firm, Gordon & Associates, of preying on “financially distressed borrowers by promising to reduce their monthly mortgage payment in exchange for fees of $2,500 to $4,500.” The law firm allegedly provided “little, if any, meaningful assistance to modify homeowners’ mortgage loans or prevent foreclosure.” [Kate Berry, “CFPB Accuses California Law Firm of Running Debt Relief Scam,” National Mortgage News, 08/01/12]
  • The CFPB claimed these actions were a “violation of federal law” and potentially violated a “2009 state law that prohibits advance fees for loan modification services.” [Ronald Campbell, “Consumer Bureau Sues, Shuts Loan Mod Shop,” The Orange County Register, 08/08/12]

Status

Open


8:12-cv-02088-AG-AN(x) 12/3/2012 12/3/2012

CFPB Halts Alleged Nationwide Mortgage Loan Modification Scams
http://www.consumerfinance.gov/policy-compliance/enforcement/actions/national-legal-help-center/

  • Consumer Financial Protection Bureau (CFPB)
  • Federal district court case
  • U.S. District Court Central District of California
  • Nonbank
  • Pending
  • Not Available

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