Homeowners Beware of Mortgage Scammers
I recently read an article in the Chicago Tribune about mortgage scams that got my blood boiling. While the case I read about happened in Florida, it is a situation that can easily happen to any homeowner struggling with their mortgage payments. The scam involves companies that promise to 'stop your foreclosure - GUARANTEED!' But they will do so only AFTER you send them as much as $1,000 or more in up-front 'processing and negotiating' fees!
According to Tribune reporter Kenneth R. Harney, companies taking cash up front, and promise "guaranteed results," better perform as advertised, because if they don't, these companies will likely be charged with running a fraud!
Recently, the U.S. Federal Trade Commission filed a lawsuit against a Clearwater, FL, Mortgage Assistance Company – Mortgage Foreclosure Solutions, Inc. They charged the company with running a scheme to offer and sell mortgage foreclosure services nationwide via half a dozen Web sites. But in all, except in a few scattered cases, they never actually prevented foreclosures at all! The company seemingly guaranteed miraculous results in their advertisements, no matter the size or tardiness of the mortgage, or borrowers' credit credentials and FICO Credit Score.
Borrowers signing up were charged an up-front $1,200 for the service. Yet, in virtually every case, the company failed to prevent foreclosure or save distressed borrowers' homes. Those who did avoid foreclosure say they did so of their own initiative, without help from the company.
Earlier this month, the company settled in court. The Federal Trade Commission (FTC) obtained a judgment of $1.2 Million against the company, as well as an agreement that they would no longer promise guaranteed foreclosure abatement. Mortgage Foreclosure Solutions admitted no wrongdoing as part of the settlement.
According to the Tribune, Cindy Liebes, assistant regional director of the FTC, contends that mortgage rescue companies typically have no special ability or priority to negotiate loan modifications or forbearance on behalf of distressed borrowers. Unscrupulous firms prey on distressed homeowners when they are most frustrated, and most vulnerable, she said.
Liebes warns homeowners having difficulty keeping up with their house payments to avoid companies using the following likely-fraudulent tactics:
1. Guarantees to stop foreclosure, regardless of your financial situation. No legitimate company, she says, would make such a guarantee.
2. Charges an up-front fee before any assistance is undertaken.
3. Advises borrowers to avoid direct contact with the lender, delegating all negotiating duties to the firm. Consumers should note that most lenders suggest that borrowers contact them directly to request forbearance or modification on their mortgage loans in order to best resolve their financial issues.
4. Requires payment of mortgage to the rescue company's office, instead of the lender.
5. Asks for title to the property in advance. You would assume that most homeowners would never fall for such schemes. But unfortunately, many that are in dire financial situations fall prey to this scam!
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