There are few things more stressful than the threat of losing your home. So it’s no wonder so many people fall victim to mortgage relief scams. While the claims may sound too good to be true, those facing the alternative (monthly payments they cannot afford or, worst case, foreclosure) suspend disbelief.
Federal and State officials filed lawsuits accusing dozens of companies of ripping off struggling homeowners by falsely promising help in avoiding foreclosures or lowering mortgage payments while collecting millions of dollars in illegal upfront fees. Don’t fall victim to one of these companies!
Tips to Avoid Mortgage Relief Companies
- Make guarantees. Only your lender can offer a guarantee of any kind regarding your loan, be it a loan modification or stopping the process of foreclosure. Even a money-back guarantee should be avoided at all costs. You’ll never see that money again.
- Ask for an upfront fee. The Mortgage Assistance Relief Services (MARS) Rule makes it illegal for any mortgage relief company from asking you for money to be paid prior to services provided. In fact, they may only collect fees from you in the event that a mortgage relief offer is made from your lender, and only after agreeing to accept it.
- Require that you make payments via wire transfer, cash, or cashier’s checks. You can be sure they’re up to no good.
- Claim to have a special relationship or affiliation with the lender or the government. Mortgage relief companies do not have special relationships with your lender, period.
- Claim to be lawyers or to have some affiliation with a law firm. While lawyers may offer mortgage relief services, verify that they are, indeed, members of the bar association via the National Organization of Bar Counsel.
- Make fantastic claims of success rates among clients. Common are success rate claims of 90 to 99 percent.
- Ask you to make your monthly mortgage payments directly to them. The only place to send your monthly mortgage payments is direct to your lender. No reputable company would ask to serve as a third-party collector of this money. It’s safe to say your mortgage lender will never see any of those payments.
- Say they want to do a forensic audit. A forensic audit is a process of reviewing your mortgage papers to be sure your lender made no violations of the law. However, forensic audits almost never turn up such information, and, in which case it in no way affects a lender’s modification of your loan or foreclosure actions.
- Ask you to surrender the title of your home to them so they can rent to you. They may offer for you to buy back the home, but it’s usually too expensive for you to do so. Or, they may raise the rent on you over time until it is too much for you to afford.
- Ask you to sign over the deed to your home so they can find a buyer for you. In this scenario, they rent out the home until the lender finally forecloses on the property.
- Ask you to sign papers so as to make your mortgage current. Buried in this paperwork is likely verbiage surrendering the title of your home.
Talking to your lender is always a better alternative to a mortgage relief company. Your lender doesn’t want you foreclosing either, so you may be surprised at what they may be able to work out. You may also find help through the Homeownership Preservation Foundation, a nonprofit that offers assistance with the loan modification and foreclosure prevention process.
If you feel you may have fallen victim to one of the above scams, call your local State Attorney General office immediately. They will assist you in any legal action you may have to take against this company.