A mortgage loan modification company in Orlando, Fla., is being sued by Attorney General Bill McCollum for allegedly violating the state’s new foreclosure rescue law, The Associated Press reports (“Fla. AG Accuses Home Loan Rescue Company of Fraud,” Feb. 15, 2009).

Investigators with the attorney general’s Economic Crimes Division found that the company, FMA Servicing — which does business as Financial Management Advisors —had preyed upon troubled homeowners in danger of losing their homes to foreclosure by falsely advertising that it had attorneys and accountants on its staff, and illegally charging clients upfront fees of $2,500.

Under the state’s Foreclosure Rescue Fraud Prevention Act, which went into effect on Oct. 1, 2008, companies offering services meant to “rescue” homeowners from foreclosure, including short sales and loan modifications, are prohibited from charging customers any up-front fees and are required to provide customers a written agreement of the services it will provide.

McCollum’s office is seeking a temporary injunction prohibiting Financial Management Advisors from charging consumers the illegal up-front fees, and seeks to permanently shut the organization down. Luis Gonzalez, an attorney for the mortgage modification company, denies the company did anything wrong.

If the injunctions are granted by a Florida court, Financial Management Advisors must cease its daily operations. It addition, the company will be required to pay restitution to its customers and civil penalties of up to $10,000 per violation, and to reimburse the state for litigation and investigation costs.

“Companies and individuals who target homeowners in potentially desperate situations should not be operating in our state,” McCollum said. “Florida will not tolerate businesses that prey upon those on the verge of foreclosure.”

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