Settlement Resolves Allegations of Harassing Sales Calls, Bait and Switch Sales Tactics, and Other Violations of Consumer Protection Laws

Consent Order

NEWARK – Attorney General Matthew J. Platkin and the Division of Consumer Affairs today announced that a nationwide mortgage provider formerly based in New Jersey has agreed to a $502,000 settlement to resolve allegations that it violated the state’s consumer protection laws in the sale and servicing of mortgages throughout the State and beyond.

Freedom Mortgage Corp. (“Freedom Mortgage”), which maintained its headquarters in Mount Laurel, NJ, for more than a decade before moving to Florida in 2022, allegedly bombarded consumers with harassing sales calls about loan refinancing, engaged in bait-and-switch sales tactics to induce them to refinance their loans, and caused them financial harm by repeatedly failing to meet its responsibilities as a loan servicer.

The allegations stem from the Division’s review of more than 1,400 complaints from around the nation, both obtained through the Better Business Bureau and filed directly with the Division, involving conduct that occurred from January 2015 to June 2022.

In a Consent Order filed today, Freedom Mortgage and the Division agreed to resolve the allegations and conclude the investigation without further action.

Under the terms of the settlement, Freedom Mortgage will pay $365,200 in civil penalties and $136,800 in reimbursement for the Division’s attorneys’ fees and investigative costs.  An additional $50,000 in civil penalties is suspended but will become immediately payable if Freedom Mortgage fails to comply with the settlement terms within the next year.

The settlement also provides that any consumer complaint received by the Division within the next year be forwarded to Freedom Mortgage for resolution and, if not resolved, to the Division’s Alternative Dispute Resolution Unit for binding arbitration. Additionally, within 30 days of the filing of the Consent Order, Freedom Mortgage must designate an employee to serve as the company’s Complaint Coordinator for a period of 18 months. During this time, the Complaint Coordinator will be responsible for ensuring Freedom Mortgage complies with the terms of the Consent Order and all applicable consumer protection laws and regulations.  The Complaint Coordinator will also be responsible for providing the Division with written quarterly reports summarizing additional complaints received or resolved by Freedom Mortgage.

“Harassing phone calls from telemarketers aren’t just annoying, they’re illegal,” said Attorney General Platkin. “This settlement puts a stop to the unlawful and abusive conduct Freedom Mortgage subjected consumers to and puts mechanisms in place for greater accountability and oversight to prevent it from happening again.”

“Protecting consumers from being browbeaten and defrauded by New Jersey telemarketers is an important responsibility that the Division takes seriously,” said Cari Fais, Acting Director of the Division of Consumer Affairs. “Our investigation into the complaints against Freedom Mortgage revealed egregious conduct that the company is now being held accountable for.”

The Division found that Freedom Mortgage violated the New Jersey Consumer Fraud Act (“CFA”), the Advertising Regulations, and the Telemarketing Do Not Call Law and related regulations by:

• making unsolicited telemarketing sales calls to consumers despite not being registered with the Division as a telemarketer;
• engaging in abusive and deceptive telemarketing practices, primarily involving multiple refinancing solicitations;
• engaging in “bait-and-switch” sales tactics, such as inducing consumers to refinance their loans at lower rates only to raise the rates after consumers sign the refinancing documents;
• failing to timely disburse payments from escrow;
• failing to apply consumers’ mortgage loan payments in a timely manner, or at all, resulting in negative credit reporting for consumers, as well as late fees;
• failing to timely issue escrow refunds to consumers; and
• failing to respond to consumer inquiries with accurate information.

Jennifer Micco and Ruth Liu of the Division’s Office of Consumer Protection conducted the investigation.

Deputy Attorney General Jeffrey Koziar of the Consumer Fraud Prosecution Section within the Division of Law’s Affirmative Civil Enforcement Practice Group represented the Division in this action.

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