(CN) – First One Lending and its president must stop claiming an affiliation to a nonprofit that helps needy families with their mortgages, a federal judge ruled.
In a March 2012 complaint, the Neighborhood Assistance Corp. of America claimed that First One “has a poor business reputation” and tried to capitalize on a better branded company to charge homeowners up to $1,800 apiece for “worthless” services.
Neighborhood Assistance describes itself as a nonprofit that helps low- and moderate-income families with their mortgages. Though it provides mortgage-modification services free of charge, First One makes false and misleading statements to “cheat desperate homeowners facing foreclosure” and sell the same services, according to the complaint in the Central District of California.
U.S. District Judge David Carter in Santa Ana refused to dismiss the complaint against First One and its president, John Vescera, last week.
Concluding that Neighborhood Assistance was likely to succeed on the merits of its case, Carter also granted the group a preliminary injunction.
First One has allegedly claimed that it is affiliated with Neighborhood Assistance, that it is a nonprofit, and that the U.S. Department of Housing and Urban Development sponsors it and has approved it as a housing counseling agency.
“The purpose of defendants’ numerous misrepresentations, including misrepresentations about First One’s affiliation with NACA, is to gain the confidence of consumers so that defendants can accomplish their goal: taking hard-earned money from vulnerable homeowners who can ill afford to squander the $1,450 to $1,850 typically charged by First One for its purported services,” according to the complaint.
“The services that First One purports to provide are essentially worthless,” the complaint continues. “For the $1,450 to $1,850 typically paid, First One does nothing more than submit financial information provided by the homeowner to NACA, which homeowners can do free of charge through NACA’s website. As discussed further below, through its Home Save Program, NACA provides homeowners assistance in assembling and submitting documentation to their mortgage servicers free of charge to the homeowner.”
Neighborhood Assistance claims that at least 240 homeowners have fallen for First One’s scam.
Judge Carter supported the claims, finding that Neighborhood Assistance passed two 9th Circuit tests for a preliminary injunction to enjoin First One and Vescera from “making several allegedly false and misleading statements about defendants’ services and affiliation with plaintiff.”
The injunction blocks First One and Vescera from alluding to an affiliation with Neighborhood Assistance or using the other company’s name “in any advertising or promotional materials, or in any other written materials provided to First One’s customers or potential customers. They also cannot refer any person to NACA or register any person to become a NACA member through NACA’s website.
First One furthermore cannot give the impression that it provides either loan-modification services or housing counseling services, or that is approved by the U.S. Department of Housing and Urban Development, according to the 34-page decision.