Court halts operations at Halethorpe mortgage-relief firm

The U.S. District Court in Maryland has halted operations at a Halethorpe mortgage-relief firm after the Federal Trade Commission alleged that the company was scamming desperate homeowners out of their money, the agency said Friday.

Foreclosure-help scams have run rampant across the country since the mortgage crisis hit three years ago. The FTC, which announced the complaint against Residential Relief Foundation, also issued new rules banning companies from collecting fees until they negotiate a payment agreement that the homeowners find acceptable.

The FTC alleged that Residential Relief Foundation and related local firms, including the Law Office of James Holderness, posed as a government assistance program. Firm employees charged $1,495 upfront to customers across the country for an "initiative" they claimed could dramatically reduce monthly payments, but the FTC said they failed to negotiate a loan modification for many of their clients.

Residential Relief Foundation also tossed paperwork with clients' financial information into easily accessible dumpsters, the agency said.

In addition to halting the operation, a U.S. District Court judge temporarily froze the defendants' assets and appointed a receiver.

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