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CFPB Wins $59 Million Judgment Against Mortgage Relief Firms

Nov. 6, 2019, 4:10 PM

The Consumer Financial Protection Bureau won a $59 million judgment against a pair of shuttered mortgage relief law firms that the bureau alleged scammed consumers seeking to escape underwater home loans.

The bankruptcy estates of the Mortgage Law Group and the Consumer First Legal Group, along with the firms’ principle members, will pay a combined $59 million in restitution and civil money penalties, according to a Nov. 4 post-trial order by Judge William Conley of the U.S. District Court for the Western District of Washington.

The two firms had argued that some district court orders and the U.S. Supreme Court’s 2017 decision in Kokesh v. SEC limited the CFPB’s ability to collect restitution from companies and individuals that violate federal consumer financial protection laws. Conley found that those rulings did not stop the CFPB from ordering disgorgement of ill-gotten gains, with Kokesh only applying to the statute of limitations for such penalties.

The CFPB sued Mortgage Law Group and the Consumer First Legal Group in July 2014, alleging that they had collected more around $22 million in improper advance fees from clients, misrepresenting the types of relief services they provided consumers and other violations.

The two law firms and their principles were found liable for most of those claims in a July 2016 summary judgment order. The Mortgage Law Group filed for bankruptcy protection in April 2014, while Consumer First Legal Group stopped operations in 2013.

While much of the case was decided in a series of consent agreements and summary judgment orders, Conley left open how much the law firms and their principles would have to pay.

Counsel for the two firms could not immediately be reached for comment.

Consumer Financial Protection Bureau v. The Mortgage Law Group LLP et al, W.D. Wash., 3:14-cv-00513, Order on Restitution and Disgorgement 11/4/19

To contact the reporter on this story: Evan Weinberger in New York at eweinberger@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com