Record contained sufficient evidence to support liability finding in civil enforcement action under Consumer Financial Protection Act, alleging that defendants-law firms violated Regulation O by telling consumers seeking loan modifications not to communicate with original lenders, failing to make mandatory disclosures and collecting unlawful advance fees with respect to providing mortgage-assistance relief services. Ct. rejected defendants’ contention that they were exempt from liability because they were practicing law, where record showed that defendants typically charged $3,375 per client, which covered only firms’ loan-modification services, and local attorneys associated the defendants: (1) performed only perfunctory review of loan modification applications that had been generated by non-attorneys; and (2) read enrollment script about services and fees. Moreover, in house attorneys in defendants’ law firms did not apply legal principles and/or judgment to particular set of facts so as to qualify for exemption. However, Dist. Ct. erred in imposing $21,709,021 restitution order, since said order exceeded defendants’ net profits. Also, Dist. Ct. erred in calculating civil penalties ranging from $11,350,000 to $3,121,500 against defendants and their attorneys, since said penalties were based on erroneous finding that attorneys had acted recklessly.
Federal 7th Circuit Court
Civil Court
Consumer Financial Protection Act