Being a common homeowner, it is not always possible to spot home loan oriented scams. If you are a homeowner who desperately wants to survive in this housing downfall and want to save his house from being foreclosed, a mail or phone call with a lucrative offer may easily tempt your mind. Companies offering low rate loan modification deals are likely to be a boon to those eager people who accepts these offers to save hundreds of dollars in a month. But “all that glitters is not gold”...most of the time it could turn out to be much worse than before.
Starting from giving false assurance to doing nasty tricks, those companies play every possible tricks to snatch money from the unfortunate homebuyers. So, staying unaware of the signs of mortgage-relief scams are not an option for you. Take a deep breath & know more about these signals to locate those scammers. Below given points may be helpful for you to recognize a fraud person or a company :
a) Upfront fee - A person or company might charge you an upfront fee in return of mortgage modification. According to the Federal Trade Commission (FTC) Mortgage Assistance Relief Service (MARS), no matter what are the circumstances, it is illegal for the companies or a person to ask you any kind of fee in advance. The company must send you an offer-letter stating the total cost associated with the loan modification process.
b) Guaranteed offer – Do not accept any offer from a person/company that guarantees to provide you a loan modification. Any reputed law firm can not possibly offer you a guaranteed mortgage modification. The firms/persons can only try to help you out with best possible deal they could offer.
c) “Stop payment” advice - The company/person might advice you to stop making your monthly payments. Do not fall into this trap. If you stop paying your lender monthly, this might end up with foreclosure & damaging your credit.
d) Unread paperwork – The company/person may put a pressure on you to sign over the house deed or to sign any other document without reading or properly understanding it. You must know the fact that a genuine professional housing counselor would never ask you such a thing.
e) Official sounding names – Scam companies or persons may pretend themselves as government affiliated or approved firms. That doesn't mean they are positively engaged with the government. You should contact your lender first to know whether you can qualify for any federal programs or not. You must also remember that government aided programs are totally free of cost.
f) Privacy policy – A legitimate mortgage counselor will not ask you to reveal your personal data over the phone or online. But some fake persons/companies may request you to submit your confidential details in public. If you are unaware of them, do not hesitate to refuse the offer. You should send your personal data only to your reputed mortgage lender or a HUD-approved agency to avoid any kind of manipulation.
g) Forensic loan audit – It is not guaranteed that a Forensic loan audit would be a remedy for foreclosure. Fake mortgage consultation companies or an agent might assure you that a Forensic loan audit can increase the chance of your mortgage modification, but actually it is not true. It will not simplify the loan modification process even when it is done by a professional auditor or a lawyer.
f) Monthly payments – It will be a foolish decision if you send your monthly mortgage payment to another person rather than the lender directly. Con artists may ask you to deliver the money to them instead of the lender. If you do this, there is a greater chance that they would consume your money totally & disappear without any leaving trace. Apparently, your will gain nothing & you will lose your home.
Action taken by the authorities to stop mortgage mis-modification scams
On the last 23rd of July, 2014,The Federal Trade Commission(FTC) , Consumer Financial Protection Bureau (CFPB) and 15 states have revealed the names of some fake companies who were engaged in manipulation of homeowners finances and illegally charging them for fake foreclosure relief. The FTC , CFPB have filed lawsuits against those companies after commencing an investigation named “Operation Mortgage Mismodification”. Those companies are accused for using nasty tricks, which is mentioned earlier, to mislead the desperate homeowners. It is also revealed that those fake companies collected more than $25 million as upfront fees.
According to the FTC reports, lawsuits have been filed against:
Danielson Law Group (Utah)
FMC Counseling Services, Inc. (Florida)
Lanier Law (Florida)
Mortgage Relief Advocates (California)
Home Relief Foundation (Texas)
CD Capital Investments (California)
According to CFPB reports, lawsuits have been filed against:
Clausen & Cobb Management Company and the owners - Alfred Clausen and Joshua Cobb, Siringoringo Law Firm & it's owner Stephen Siringoringo.
The Mortgage Law Group, LLP, the Consumer First Legal Group, LLC, and the attorneys Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford.
The Hoffman Law Group, its operators, Michael Harper, Benn Wilcox, and attorney Marc Hoffman, and its affiliated companies, Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group.
Fifteen of U.S states have also taken needed steps in Operation Mis-Modification. They filled 32 lawsuits separately through state attorney generals and other state agencies.
So, it is advised to the common homeowners that whenever they want to take any mortgage related risks, they should check out various options before making the final decision. If you feel that you've been mislead by someone, take strict action to safeguard yourself.