Last Remaining Defendants in "Hope Now" Scheme Settle FTC Charges; Order Puts Them Out of the Mortgage Relief Business

The Federal Trade Commission has obtained a settlement against the remaining defendants in an allegedly fraudulent mortgage modification scheme that will permanently ban them from the mortgage assistance business and force them to return ill-gotten gains to consumers.

The settlement with Michael Kwasnik and his law firm is part of the FTC’s ongoing crackdown on scams taking advantage of consumers in financial distress.  The settlement order bans Kwasnik and the firm from advertising, marketing, promoting, or selling mortgage assistance relief products or services, or assisting others to do so, and requires them to pay $137,656 to the FTC for consumer redress.

The FTC alleged that Kwasnik and his law firm were part of an operation called Hope Now Modifications that falsely claimed to be part of HOPE NOW Alliance, a non-profit, government-endorsed mortgage assistance network.

In March 2009 the FTC charged Hope Now Modifications and its two principals with falsely advertising that they were part of the HOPE NOW Alliance.  The FTC also alleged that the defendants often diverted one month’s mortgage payment as a fee from distressed homeowners, failed to help them modify their mortgages, and then denied them refunds.  In September 2009, the FTC amended its complaint, adding Kwasnik and his law firm, The Law Firm of Kwasnik, Rodio, Kanowitz & Buckley P.C., as defendants, and adding allegations that all defendants violated the FTC’s Telemarketing Sales Rule by falsely advertising their services.  The original defendants, Hope Now and its two principals, settled the FTC charges in July 2010.  They also agreed to be banned from selling mortgage relief services and to surrender all the funds in their bank accounts, which had been frozen by the court.

In addition to the ban on mortgage assistance relief services, the settlement announced today prohibits Kwasnik and his law firm from misrepresenting the benefits, terms, or conditions of financial products and from making misrepresentations about any good or service, including claims of an affiliation with any government entity or program.  They also are prohibited from violating the Telemarketing Sales Rule, and must protect and properly dispose of customer personal information.  

For consumer information about avoiding mortgage and foreclosure rescue scams, see Your Home at the FTC website Money Matters.

The Commission vote approving the proposed consent order against defendants Michael Kwasnik and Kwasnik, Rodio, Kanowitz & Buckley P.C. was 4-0.  The FTC filed the proposed consent order in the U.S. District Court for the District of New Jersey, and it was entered on November 4, 2011.

NOTE:  This consent order is for settlement purposes only and does not constitute an admission by the defendants that the law has been violated.  Consent orders have the force of law when approved and signed by the District Court 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, visit the FTC’s online Complaint Assistant 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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook and follow us on Twitter.