The Federal Trade Commission has mailed more than $8 million in redress checks to more than 15,000 people who obtained home mortgage loans through subprime lender First Alliance Mortgage Company (FAMCO). In 2002, the FTC had charged FAMCO with violating federal law in making home equity loans. The FTC alleged that the company misled consumers about the existence and amount of origination fees for its loans, and the interest rate and monthly payments of their adjustable rate mortgage loans. FAMCO marketed its loans to the subprime market, which included homeowners with poor credit ratings who might not have been able to qualify for conventional loans. This is the final compensation to be distributed in this matter; the FTC previously distributed more than $66 million to FAMCO customers.
The redress fund was established in 2002 when FAMCO (since liquidated in bankruptcy) and related defendants reached a joint settlement with the FTC, Arizona, California, Florida, Illinois, New York, Massachusetts, AARP, and private plaintiffs. The FTC initially distributed checks to consumers in December 2002. The redress fund received additional money in 2003, and the Commission mailed a second round of refund checks in January 2004. With additional funds collected in 2009 in accordance with the settlement agreement, in May 2009 the agency mailed checks to borrowers who cashed the previous checks. Borrowers who received a $500 lump sum in the first round of the distribution did not receive additional checks because they were part of a prior private settlement in Dunning v. First Alliance.
The FTC maintains a Web site with details about the settlement and redress at www.ftc.gov/famco. For more information, call the FTC’s toll-free hotline at 1-877-862-0886.