FTC Brings Action Against Debt Relief Operation that Targeted Financially Distressed Homeowners and Student Loan Borrowers

The Federal Trade Commission has charged a debt relief operation with falsely representing to financially distressed homeowners and student loan borrowers that it would help get their mortgages and student loans modified. At the FTC’s request, a federal court has temporarily halted the operation. The agency seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers.

According to the FTC’s complaint, Good EBusiness LLC, using the name The AAP Firm, and Tobias West deceptively marketed home loan modification services and illegally charged an advance fee of between $1,000 to $5,000. The agency alleges that the defendants falsely claim that they can lower consumers’ monthly mortgage payments, often quoting a specific amount, and reduce their mortgage interest rates, usually within a few months, and falsely promise full refunds if they fail. They told consumers, many of whom were current on their mortgage payments, to stop making payments to, and communicating with, their lenders during the purported loan restructure process, without providing disclosures required by the Mortgage Assistance Relief Services Rule (MARS Rule) and Regulation O, according to the complaint.

The FTC’s complaint also alleges that Good EBusiness, using the names Student Loan Help Direct and Select Student Loan; Select Student Loan Help LLC; Select Document Preparation Inc.; and Tobias West and his wife, Komal West, illegally charged an advance fee of $500 to $800 for purported student loan relief services. According to the complaint, the defendants falsely told financially distressed borrowers – including some who were at risk of delinquency or default and already subject to seizure of their tax refunds or wage garnishment –  that they would renegotiate, settle or alter payment terms on their student loan debt, and remove tax liens and wage garnishments, or they would fully refund the fees if they failed.

Good Ebusiness and Tobias West are charged with violating the FTC Act and the MARS Rule/Regulation O. All of the defendants are charged with violating the FTC Act and the Telemarketing Sales Rule.

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Brooklyn Supreme Court faces backlog of nearly 12,000 foreclosure cases in the hands of just three judges

Newly elected Supreme Court Judge Noach Dear is one of three judges dealing with thousands of foreclosure cases clogging the courts. Nearly a decade after the start of America’s historic housing crash, the nightmare continues for forgotten homeowners behind in their mortgage.

The list of pending home foreclosures before Brooklyn Supreme Court Justice Noach Dear on Tuesday morning was enough to take your breath away. Around 11:30 a.m., a clerk in Dear’s packed courtroom at 360 Adams St. announced the cases still to be heard. There was Bank of America vs. Vazquez, Bank of New York vs. Antigone, Citi Mortgage vs. Green, Deutsche Bank vs. Paz, Federal National vs. Castro, HSBC Bank vs. Ambrose, JPMorganChase vs. Roberts, PennyMac vs. Acevedo, Wells Fargo vs. Hamilton —more than 65 in all.

But lawyers and advocates for distressed homeowners say Dear’s courtroom has become a prime example of a new “assembly line” approach to justice by the Brooklyn court system. At separate tables in the front, two law clerks convened a steady string of meetings with contending parties while the judge looked on.“You should see how busy this place gets on Thursdays and Fridays,” said Dear, who is overseeing nearly 6,500 foreclosure cases all by himself.

Dear rarely holds a hearing with a court stenographer present to make a formal record of the proceedings. He simply oversees the meetings his clerks hold.

In January, Lawrence Knipel, the administrative judge for Kings County’s civil division, suddenly consolidated the borough’s enormous backlog of nearly 12,000 foreclosure cases in the hands of just three judges, with Dear getting more than half of them. Previously, those cases had been spread among more than 25 judges who also heard other kinds of cases.“The old way wasn’t working,” Knipel told the Daily News. That’s because foreclosures have mushroomed into more than a third of all civil cases in New York state courts. More than 41,000 new ones were filed statewide last year. That’s not a whole lot less than the 47,000 filed at the height of the housing collapse in 2009.

And more the 60% of the state’s foreclosure cases are concentrated in four downstate counties, including Brooklyn and Queens. 

Along one wall of Dear’s courtroom, a row of 10 big metal cabinets are filled with case documents. Mountains of newly arriving files are piled on top. “We get a truckload of these every day, and we’re handling it,” said Dear, who has scheduled an average of 100 cases a day.“My goal is to issue decisions on all motions within two weeks of their being filed,” Dear said. But such rapid justice is dangerous, says Jacob Inwald of Legal Services NYC.

In a letter signed by a dozen legal advocacy groups, Inwald warned that he saw no way “three judges can possibly handle this volume of cases without either causing unimaginable delays” or “reverting to a rubber-stamp process … in which robosigned pleadings and motion papers once again become the norm.” 

Knipel and Dear reject such criticism.“If I have to make a decision on the spot, I make it on the spot,” Dear said. “But I’m going to be fair to everyone. I’m very big on customer service. Everyone will be respected in my courtroom.” 

Under the old system, Knipel noted, some judges were allowing cases to drag on for years. “Nobody likes to foreclose on people’s homes, so things don’t get done,” Knipel said. “The most efficient way to handle this matter is to do it by dedicated parts.”

The advocates agree that assigning a group of judges to solely handle foreclosures is a good thing. But three is hardly enough, they say. “There are nearly 50 judges in Brooklyn’s civil division,” one lawyer said. “Why assign a third of the court’s entire caseload to just a few judges?”

Knipel appeared to be listening. “I’ll soon be adding a fourth judge,” he said, and acknowledged he might make other changes to the new approach. “That’s why they make erasers on the back of pencils,” he said. “We have to constantly reexamine what we’re doing, and be open to change.”

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