BBB and FTC to Prevent Mortgage Relief Fraud

With so many homeowners still struggling with their current mortgage responsibilities, numerous mortgage relief services companies have started offering their services to help find solutions. However, the Better Business Bureau (BBB) has indicated an increase in complaints aimed at service companies and has issued a warning to all homeowners who have been contacted by these types of companies. Many borrowers who have fallen behind on their mortgage payments and are facing foreclosure have been contacted by sometimes bogus companies who offer to negotiate on behalf of the homeowner to obtain a loan modification, short sale agreement, or some other relief to prevent foreclosure.

 

The BBB has issued a warning to take special precautions when researching mortgage relief service companies as many offers are coming from agencies who are seeking to collect fees for their services prior to any activities. Furthermore, due to the large number of complaints they have been receiving, the BBB is warning that many of these companies are actually seeking to deceive homeowners by collecting fees for services they have no intention of performing.

In just one example, the BBB has reported that thousands of distressed borrowers have contacted their offices to inquire about a Maryland-based company called Residential Relief Foundation. 62 complaints have been received thus far regarding this company and the Federal Trade Commission (FTC) announced in late November that a federal court has shut down the company due to deceptive practices. They BBB noted that the company often used wording and graphics that would mimic official government mortgage assistance programs to lure their prey.

The FTC has taken a further step to protect distressed homeowners by issuing a new rule called the Mortgage Assistance Relief Services Rule which bans providers of mortgage foreclosure rescue and loan modification services from collecting any fees until a written offer for relief has been received by the homeowner from their lender or servicer. The rule is intended to take away the incentive for dishonest companies to continue to utilize the current schemes. The rule goes into effect on December 29, 2010.

The solution most often recommended for homeowners who have fallen behind on their payments or are in danger of foreclosure is to contact their loan directly and ask about available options. Explain your situation and request a revised repayment schedule. Be honest with your lender about your situation so they can provide you the appropriate recommendations. No guarantees can be made that the lender will make modifications, but asking for their help is the best first step you can make.

If you receive an offer for a loan modification, foreclosure rescue, or other representation to assist you with your home mortgage payments, be sure to first research the company thoroughly, including a review of their standing with the BBB. You can check a company’s history at www.bbb.org.

Other tips for distressed homeowners is to treat all unsolicited advertisement with extreme caution. Do not be fooled by clever wording or seals that are made to look official. Never sign away your title to your home without consulting an attorney. If you are offered a contract, be sure to have it reviewed by a lawyer before you sign. Any companies that only offer their services for an up-front fee should be considered suspect. With the new rules going into effect on December 29, 2010 to ban up-front fees, there will likely be a strong wave of advertising attempts made in the next few weeks before the rules limit these deceptive practices.

If you ever have any questions about your mortgage situation and would like the advice of a professional, feel free to contact us at info@missionmortgage.com. Or call your mortgage lender for advice on your particular situation.

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About missionmortgage

A full-service professional mortgage banker providing lending in Texas for over 25 years. Our main office is located at 901 S. Mopac Expwy, Barton Oaks V- Suite 120, Austin, TX 78746 with branches in Lakeway, Houston, and Sealy. Mission Mortgage has been ranked as a Top 10 Mortgage Company in Austin for the past 7 years (Austin Business Journal).
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