HUD charges mortgage modification service for violation of fair housing law


On April 30, HUD announced a charge of discriminating against a California-based mortgage modification service (Respondents) for allegedly violating the Fair Housing Act by discriminating against Hispanic homeowners. According to HUD, the plaintiffs alleged that the respondents had targeted them for illegal or unfair loan modification assistance on the basis of their national origin and that, as a result, “they had been diverted from obtaining legitimate assistance. And “were in danger of being seized”. More specifically, the respondents marketed and sold loan modification services to financially troubled California homeowners, the majority of whom were Hispanic. The allegations state that most of the advertisements were in Spanish or aired on Spanish language channels and contained allegedly misleading information regarding the respondents’ ability to obtain loan modifications, as well as its payment structure. Further, the plaintiffs stated that they were discouraged from seeking free loan modification assistance and, among other things, had to (i) charge a fee before the respondents made the promised mortgage loan modifications. ; (ii) advised to stop making payments without being informed of the risks associated with non-payment of their mortgage; (iii) provided inaccurate information about the Respondents’ services, including whether the clients would be receiving legal counsel; and (iv) instructed to cease communicating with their lenders and instead forward all communications with lenders to the Respondents if they are threatened with foreclosure. The charge will be heard by a United States administrative judge, unless a party chooses to have the case heard in a federal district court.

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