The Federal Trade Commission has settled a lawsuit with First Alliance Mortgage Company. As part of the agreement, nearly 18,000 borrowers that had been solicited for loans through direct mail and telemarketing efforts could share up to $60 million in compensation.
The FTC’s complaint alleged that Irvine, CA-based First Alliance violated state and federal laws regarding making home mortgage loans to consumers. Specifically, a sales presentation misled consumers about the existence of loan fees, the FTC said in a statement.
The company targeted consumers in the “sub-prime” market, which includes homeowners with poor credit ratings that might not otherwise qualify for conventional loans, according to the FTC.
As part of the settlement, First Alliance will create a consumer redress fund from its assets, which are being liquidated in bankruptcy court. Additionally, CEO Brian Chisick and his wife, board member Sarah Chisick, will pay $20 million into the fund.
The agreement permanently bars the Chisicks from engaging in the residential loan business in California, Florida and Illinois, and prohibits them from doing so in Arizona, Massachusetts and New York for 10 years.
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