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Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

Forensic Auditors Accused of Scam

FTC v. Debt Advocacy Group

June 1, 2010

By staff

A lawsuit by the government has been expanded against a company that allegedly promised to help borrowers extract better modification or short-sale terms from lenders by finding mortgage compliance errors.

The firm is the Debt Advocacy Center LLC, a limited liability company in Cleveland.

According to a statement today from the Federal Trade Commission, the defendants offered forensic audits where they reviewed loan documents for violations of the law that would give borrowers leverage in negotiating loan modifications or short sales.

"Their ads stated, 'We have found that between 80-90% of all loans that we have audited have some form of rights violations,'" the FTC said. "They collected $995 in advance for each audit even though an audit was unlikely to assist in negotiations with lenders."

The government alleges that Debt Advocacy claims of success were false.

In addition, the defendants are accused of telemarketing without paying the required annual fee to access telephone numbers on the National Do Not Call Registry.

In today's statement, the FTC said it added several new defendants in an amended complaint.

FEDERAL TRADE COMMISSION, Plaintiff, v. THE DEBT ADVOCACY CENTER, LLC, a limited liability company, SMITH, GROMANN & DAVIDSON, P.A., CREDITLAWGROUP, an Interstate Partnership of Professional Associations, a Florida general partnership formerly known as Smith & Gromann, an Interstate Partnership of Professional Associations and doing business as Smith & Gromann, P.A., CREDIT SERVICES ALLIANCE, INC., a corporation EDWARD J. DAVIDSON, individually and as Chief Executive Officer of The Debt Advocacy Center, LLC and as an owner of Smith, Gromann & Davidson, P.A.
Case: 1:09-cv-02712-CAB, November 2009 (U.S. District Court for the Northern District of Ohio Eastern Division).

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