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The Federal Trade Commission has put a permanent stop to another mortgage foreclosure “rescue” operation that allegedly promoted bogus loan modification and foreclosure relief services. The case is one of 17 lawsuits the FTC has brought in the past 11 months in a crackdown on mortgage relief frauds that target financially strapped homeowners, and more cases are being investigated.

In February 2009, the FTC charged National Foreclosure Relief, Inc. and three of its principals with falsely claiming they would stop foreclosure or fully refund consumers’ money. At that time, the court temporarily halted the defendants’ deceptive practices pending trial, froze their assets, and appointed a receiver to take control of the business and its assets. Many people paid the company up-front fees as high as $1,000, but still ultimately lost their homes to foreclosure. Others avoided foreclosure only through their own efforts. After paying the fee, consumers who contacted the company were often either ignored or falsely told that negotiations with their lenders were under way.

The FTC announced today that it reached settlements with National Foreclosure Relief and a former director, Chele Stone, also known as Chele Medina, which ban them from the mortgage modification business. The settlement orders also permanently prohibit them from making misrepresentations to consumers about financial goods and services, such as loan terms, the ability to improve someone’s credit history, and how much a consumer would save by enrolling in a debt relief service, or making misrepresentations about any good or service, such as refund terms and government affiliation. National Foreclosure Relief and Stone also are prohibited from seeking payment from or enforcing any contracts with customers who enrolled in their program before the FTC’s lawsuit, and from selling or otherwise disclosing customers’ personal information.

The settlements impose a $12 million judgment, approximately $500,000 of which will be paid from company funds frozen by the court. The full judgment against Stone will become due immediately if she is found to have misrepresented her financial condition. Litigation will continue against the remaining two defendants in the case.

The FTC appreciates the assistance of the California and Minnesota Attorney General offices, and the Orange County, California, District Attorney’s office.

The Commission vote to file each of the stipulated final orders was 4-0. The documents were filed in the U.S. District Court for the Central District of California.

NOTE: Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics, click

(FTC File No. X090026)

Contact Information

Frank Dorman,
Office of Public Affairs
John D. Jacobs,
FTCs Western Region - Los Angeles