Scams of Relief for Mortgage Debtors | Information for Consumers
The possibility of losing your home in a foreclosure can be frightening. The reality presented by the opportunist swindlers who are taking advantage of the vulnerability of the desperate owners is equally frightening. Many companies say they can get you a modification of the terms of your loan that will lower your monthly mortgage payment or that you can take other measures to save your home. Some of these companies claim that almost all of their customers get successful results and even offer a money back guarantee. Others say they are affiliated with the government or their lender, and there are even some other firms that promise help from lawyers or real estate experts.
Unfortunately, many companies use half-truths and even outright lies to sell their services. They promise relief, but they never fulfill their promise. In fact, many of these companies worsen the financial situation of their clients.
The Federal Trade Commission (FTC), the national consumer protection agency, has a rule in place to protect homeowners. The rule called Mortgage Assistance Relief Services (MARS) states that it is illegal for companies to charge any type of charge until a landlord has received a specific offer from their lender to reduce their level of indebtedness and before the owner has accepted the proposal. This means that even when you have accepted a company to help you, you do not have to pay until you get the results you want.
If you are struggling to make your mortgage payments or are facing foreclosure, the FTC wants to offer you information that will help you recognize a mortgage debtor assistance scam and exercise your rights under the new rule. And although the foreclosure process has already begun, the FTC and your law enforcement colleagues want you to know what legitimate options are available to help you save your home.
When they have already managed to attract their attention, they use a variety of tactics to get their money:
How scams work
Locate homeowners who are burdened by this situation. Some of these scammers look for their victims by reviewing the public notices that notify foreclosures that appear in the newspapers or on the Internet, or by browsing the public records of local government offices, and once they locate them they send them personalized letters. Others use far-reaching methods with advertisements broadcast on the Internet, radio or television, or published in newspapers, or by placing posters or posters on telephone wiring poles, on public roads and at bus stops, or leaving pamphlets or business cards at the door of his house. Opportunistic scammers use simple and direct, but potentially misleading, messages such as:
“Stop your foreclosure now!”
” Get a loan modification!”
“More than 90% of our clients get results.”
“We have special contacts with several banks that can accelerate the approval process.”
“100% money back guarantee.”
“Keep your home, we know that the sale of your home already has a date – no problem!”
When they have already attracted their attention, they use a variety of tactics to get their money. The FTC believes that if you know how these scams work you will have better weapons to defend against fraud.
False advice or ghost help
Opportunistic scammers tell you that if you pay them a fee in advance they can negotiate a deal with your lender to reduce the amount of your mortgage payments or to save your home. You may be told not to contact your lender, lawyer or credit counselor. They promise to take care of all the details after you pay them a fee. From the very moment you pay them, they stop answering your calls and disappear with your money.
Sometimes, false counselors insist that while they negotiate your case with the lender, you pay their mortgage payments directly to them. It is likely that they will charge you some monthly payments – and then disappear.
Rental fraud for repurchase
The opportunistic swindlers who use this fraudulent rental scheme for repurchase tell you to transfer title to your home as part of a deal that will allow you to stay at home as a tenant and buy it back later. They tell you that by giving up your property title there will be a borrower with a better credit rating who will be able to get new financing – and thus avoid losing your home. But usually, the terms of these deals are so costly that the possibility of buying the house again becomes an impossible mission. In the end, you lose the house and the scammer leaves with the money that you invested in your property. Even worse, when the new borrower fails to meet their payment obligations, it is you who are evicted.
In a variation of this same trap, the scammer will increase the rent over time until at a certain moment you can not afford the payment. After failing to pay several months of rent – you, the former owner of the home – is evicted, and the “rescuer” is free to sell the house.
In a similar scam scheme about the accumulation of the net worth of your mortgage, the opportunistic scammer offers to find a buyer for your house, but on the condition that you sign a deed in your name and move out of the house. The scammer promises that when he sells the house he will give him a part of the amount of the sale. Once you transfer the deed, what the scammer actually does is rent your house and put the money in your pocket while the lender proceeds with the foreclosure. The result: you lose your home – and you are also responsible for the unpaid mortgage because the transfer of the deed has nothing to do with the transfer of your mortgage obligation.
Cat for a hare
In the cat-and-rabbit scams, the scammers give you a lot of papers and tell you that you need to sign them to get another loan to get up to date with your mortgage. But hidden inside that pile of papers is a document that establishes the transfer of title to your home by transferring it to the scammers in exchange for a “rescue” loan.
Know your rights
The MARS Rule executed by the FTC confers rights – and establishes the requirements applicable to persons selling assistance services to mortgage debtors:
You do not have to pay anything until the company complies with the results you want to obtain
It is illegal for a company to charge you a penny until:
- Has given you a written proposal to 1. get a modification of the terms of a loan or other advantage from your lender; Y
- You accept the proposal. If you decide to accept your lender’s proposal, the company must also provide you with a document written by your lender indicating the changes in the terms of your loan. And the company must clearly tell you how much the total charge that will charge you for your services goes up.
Companies must communicate key information
The Rule states that companies must clearly stipulate important information in their advertisements and during their telemarketing calls, including the following:
- That they are not associated with the government and that their services have not been approved by the government or by their lender.
- That it is possible that your lender does not accept to modify the terms of your loan.
- If a company tells you to stop paying your mortgage, you also have to be warned that failure to pay could cause you to lose your home and damage your credit.
- Companies can not tell you to stop talking to your provider. You should always keep the freedom to communicate with your lender directly to see if they can offer you some other options. Companies that tell you otherwise are breaking the law.
If a company does not follow these rules, it could be trying to scam you.
With the help of a lawyer
Some attorneys can offer to help you get a modification to the terms of your loan or other assistance to solve your mortgage problem. Attorneys under the provisions of the MARS Rule may require advance payment of their fees, but only if they meet the following conditions:
- They are licensed to practice their profession in their state of residence or where their home is located.
- They provide you with authentic legal services.
- Meet the state ethical requirements applicable to lawyers.
- They deposit the money collected in a trust account, withdraw the amount corresponding to their fees only as they provide real legal services and notify them of each withdrawal of funds.
Unfortunately, some people who advertise mortgage assistance services falsely claim they are getting the help of a lawyer. Therefore, before hiring any person who claims to be a lawyer or who claims to work with lawyers, do your research work.
Get the name of each of the attorneys who will assist you, the state or states that granted your professional license and the lawyer’s license number in each state. In your state there is an organization that grants the licenses – or bar association – that monitors the conduct of lawyers. Call your state college or bar association or check their website to see if the lawyer you are considering hiring has had any problems. On the website of the National Organization of Lawyers you can find links to the school or association of lawyers of your state.
Ask family, friends and other people you trust if they know a lawyer with proven track records in helping homeowners facing foreclosure.
Beware of lawyers who make too exaggerated promises or try to pressure you to hire them.
If you are looking for help to get a modification of the terms of your loan or to save your home, avoid making deals with any business that acts in any of the following ways:
- You are guaranteed to get a loan modification or stop the foreclosure process – regardless of your particular circumstances.
- Tells you not to contact your lender, lawyer or housing counselor.
- He says that all or most of his clients get loan modifications or some kind of help for mortgage debtors.
- He asks you to pay him before giving him the service (unless he is a lawyer to whom he investigated exhaustively).
- It only accepts payments made with cashier checks or through transfers of funds.
- He encourages you to rent your house to buy it again over time.
- It tells you to pay your mortgage payments directly to the business instead of paying them to your lender.
- It tells you to transfer the deed or title deed to your home in the name of the business.
- He offers to buy your house in cash paying a much lower price than other similar properties in your neighborhood.
- He pressures you to sign papers without giving you the opportunity to read them carefully or to sign documents that you do not understand.
Where to find legitimate help
If you have trouble paying your mortgage or if you have received a notice of foreclosure, contact the lender immediately. You may be able to negotiate a new payment program.
Consider other options to avoid foreclosure , including reinstatement of the mortgage and tolerance for default.
You can also contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates a telephone helpline available at the local level. national that attends 24 hours a day, 7 days a week (1,888,995.HOPE) and that provides free and bilingual personalized assistance to help homeowners at risk to avoid foreclosure. HPF is a member of the HOPE NOW Alliance, comprised of mortgage administrators, mortgage market participants and mortgage advisers. You can find more information at hopenow.com (in English).
If you believe you have been a victim of foreclosure fraud, contact the Federal Trade Commission , the Attorney General of your state (in English) or the local Better Business Bureau .