Avoiding foreclosure can be a nightmare, especially in the wake of 2008′s market meltdown. People are struggling to keep their homes or prevent further debt. The situation can feel hopeless, and plenty of scammers are offering the easy way out.
But don’t be tempted to give what remains of your savings away to charlatans promising to modify your mortgage for you or save your home from foreclosure.
According to the Consumer Financial Protection Bureau (CFPB), mortgage scams have bilked consumers of over $25 million in advance or legal fees. These scammers may be individuals or individuals representing legitimate-sounding companies, who promised to aid homeowners in preventing foreclosures. Many promised that they could renegotiate terms for borrowers, or do away with a mortgage completely. In all of the cases, the company promised to provide legal representation to the homeowner with no intention of fulfilling that promise. They also promised relief or to reduce the size of payments.
The CFPB has currently filed lawsuits against the following companies and individuals representing them:
- Clausen & Cobb Management Company
- The Siringoringo Law Firm
- The Mortgage Law Group, LLP,
- Consumer First Legal Group, LLC,
- The Hoffman Law Group and affiliates (Nationwide Management Solutions, Legal Intake Solutions, File Intake Solutions, and BM Marketing Group).
Take note that many of these firms are legal firms or affiliated with legal management, which gives them a legitimate air. Avoid these scammers by taking the following steps:
- Contact your lender directly to ask if they work with firm or the individual.
- Ask for identification before signing anything. Beware that many scammers are prepared for this instance. Take it a step further and contact the American Bar Association or local lawyer associations for referrals or character references.
- Warning signs include demanding payment upfront before any action is taken. This means you hand over money even before an agreement with your lender is reached. Take note that federal law does not allow law firms to request payment from borrowers asking for help with foreclosure or payment relief.
- Hard selling or subtle bullying is also a warning sign because they want you to agree before you start thinking about it. In many cases, this is money they promise to pay to collection agencies to keep people off the homeowner’s back. Never give money upfront.
- Do your research and contact the Better Business Bureau or the CFPB before entering into an agreement with a law firm or an individual representing a refinancing company to refinance/modify your mortgage.
- Watch out for unbelievable guarantees. Guaranteeing a modification to terms before negotiations happen is also a big red flag. In order to get any modifications or stall of foreclosure, your bank/mortgage company must agree to the deferment or change in writing. Keep a lookout for scammers who pretend to speak to “someone from your bank without naming names”.