Adding to its enforcement actions, the Consumer Financial Protection Bureau has taken a California company to court over a loan modification fraud scheme.

The Consumer Financial Protection Bureau has filed its first ever civil enforcement action in federal court, charging a Los Angeles law firm of duping distressed homeowners into paying high upfront fees with false promises of a loan modification.

The complaint (PDF), which was filed July 18 and unsealed July 23 in U.S. District Court for the Central District of California, accuses Chance Gordon and his firm, The Gordon Law Firm, of charging thousands of dollars in advance fees and then doing “little or nothing to assist consumers.” The agency secured an ex parte temporary restraining order against the firm at the time it filed the complaint.

Kent Markus, assistant director for enforcement, said in a written statement that: “Based on the results of our initial investigation, the court has halted a loan modification scheme that we believe has been unlawfully preying on vulnerable homeowners in multiple states. This action allows us to prevent further harm to consumers and lawfully gather additional evidence and data as the case moves forward.”

Chance Gordon has predictably denied the charges. But this is a very common scheme in hard-hit states. Some broker promises a homeowner that they can help them navigate through red tape and get them a loan modification. The homeowner, who has no doubt heard about the troubles associated with getting a modification, puts their trust in these companies, giving them large fees for the service. And then the scammers walk away, doing nothing to help the homeowner. In this case, Gordon’s company promoted themselves as a part of the US Government to homeowners, giving them the confidence needed to fleece them.

These are disgusting scams that prey on the weak, and they should absolutely be prosecuted. And the proper regulator to handle this at the federal level is the Consumer Financial Protection Bureau. This is the kind of scam they were practically invented to prevent. However, other agencies, particularly the Treasury Department and the Justice Department, have wormed their way into this, and used it as evidence that they have been vigilant in protecting homeowners from fraud.

Nothing could be further from the truth. These are penny ante scams. It’s important to stop them, but state and federal consumer protection regulators can do the job. The far larger fraud schemes are being perpetrated by major banks, whose mortgage servicers load up illegal fees, drive homeowners into default and then steal their homes with faulty documents. And Treasury, HUD, Justice and all other agencies with jurisdiction have basically either stood mute or offered slaps on the wrist for that conduct.

I’m happy any fraud scheme that harms homeowners is getting scrutiny in Washington. But this is the lowest of low-hanging fruit.