The Federal Trade Commission is continuing its efforts to identify and to shut down bogus mortgage loan relief operations that, the agency says, prey on distressed homeowners. According to a complaint filed in federal court recently, the defendants charged up-front fees for services that they never delivered. The court granted a temporary restraining order that shut down various websites and other businesses associated with the scheme.
As we said in our last two posts, the foreclosure crisis is still very much a reality in Maryland. It is easy to imagine that borrowers here who have been struggling to make mortgage payments would be tempted by the defendants’ offers to help with loan modifications or to halt a foreclosure. According to the FTC, though, these companies and the individuals behind them had no intention of helping.
What should tip any homeowner off that offers like these are too good to be true is the up-front fee. Federal law prohibits foreclosure rescue and loan modification services from collecting fees before their customers have a written offer from their lender or mortgage servicing company that they feel is acceptable.
Again, the offer must be from the lender, not from the company that is offering to help with the process. It’s an important difference.
The defendants used websites, telemarketers and television and radio ads to coax customers to buy their services. The websites offered other services, like bankruptcy advice and credit counseling, that added an air of legitimacy to the operations, the FTC said. Customers who called the toll-free number said they were guaranteed loan modifications within 60 to 90 days.
It isn’t clear from the complaint how many borrowers fell victim to the defendants’ scam. Nor is it clear how long the defendants were engaged in the alleged practices.
Source: Collections & Credit Risk, “FTC Halts Allegedly Phony Mortgage Relief Scheme,” Darren Waggoner, July 2, 2013