A Florida law firm and its several affiliates which had already been shuttered by the State of Florida and the Consumer Financial Protection Bureau (CFPB) were ordered on Friday to pay a total of $27.7 million in damages and penalties.
The judgment arose out of a lawsuit filed by CFPB and the Florida Attorney General against Hoffman Law Group (formerly Residential Litigation Group) and its operators Michael Harper, Benn Willcox, and attorney Marc Hoffman and affiliated companies operating as Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group, all based in North Palm Beach, Florida. The Hoffman Law Group was allegedly set up to create the perception that consumers who were trying to save their homes from foreclosure would receive specialized legal help. The other companies, which were run by Harper and Willcox, did marketing and support for the scheme.
The lawsuit alleged that the defendants had promised to assist financially distressed consumers in obtaining mortgage loan modifications. The firms' marketing materials misrepresented their ability to help consumers obtain substantially lower mortgage payments and duped consumers into thinking they would receive legal representation, In addition the companies collected advance payments from consumers before obtaining a loan modification which is a violation of Regulation O, formerly known as the Mortgage Assistance Relief Services (MARS) rule, and Florida state law. Ultimately many of the affected consumers did not receive a modification at all and ended up worse off than they began.
The companies also discouraged consumers from talking directly with their lenders and directed them to make mortgage payments to the Hoffman companies rather than their mortgage lenders ostensibly to better demonstrate financial hardship.
The companies had been order to cease operation and were placed in receivership in July 2014. The receivership estate belonging to the company and related individuals of $655,737 minus administrative and other expenses will be used for redress for victims. Although the court found the defendants liable for $11,730,579-the full amount of illegal fees paid by approximately 2,000 affected consumers-it suspended the balance of the judgment beyond the amount in the receivership estate as uncollectable.
The judgment also includes:
- Auctioning of personal effects of Harper, Willcox, and Hoffman with proceeds paid to the receivership estate.
- Payment of $16 million in civil and state penalties including a $10 million civil penalty for the violations of Regulation O and a $6 million state penalty for violation of the Florida Deceptive and Unfair Trade Practices Act. Although the receivership estate does not currently have enough funds to pay those penalties the individual defendants were also required to pay penalties under the stipulated judgment.
- Cease all business operations: The companies have been permanently dissolved and can no longer operate or do business of any kind. The individual defendants are permanently banned from, among other things, advertising or selling any mortgage assistance relief product or service or any debt relief product or service and Hoffman relinquished his license to practice law in the state of Florida.
CFPB Director Richard Cordray said, "These companies preyed on vulnerable consumers who were trying to save their homes from foreclosure. The false promises made by these companies lured struggling homeowners into scams that led to greater financial hardship. We are working to protect consumers from illegal predatory practices by holding bad actors accountable for their actions."
