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A federal judge in Wisconsin has ordered two defunct mortgage-relief law firms and their attorney principals to pay $59 million in restitution and civil penalties for misrepresenting their services to consumers.
The Consumer Financial Protection Bureau had alleged in its July 2014 lawsuit that the Mortgage Law Group and the Consumer First Legal Group promised to help homeowners with loan modifications and foreclosure relief, then failed to deliver the promised services.
The $59 million judgment included $21.7 million in restitution, which can be used to cover the civil penalties if the CFPB isn’t able to return the money to the firms’ former clients. The restitution amount is based on the law firms’ net revenues.
In a July 2015 summary judgment order, a prior judge in the case said the law firms collected up-front fees. Consumer regulations bar collection of fees before a consumer obtains mortgage relief in a written agreement with the lender.
An exception to the advance-fee rule is made for lawyers who provide mortgage assistance as part of their law…