Scam Artists & Homeowners: What They’re Doing and How to Protect Yourself, Part II

In the first part of this two-part series we discussed the various ways that scammers try to take advantage of homeowners facing foreclosure and other banking problems. This part addresses ways that you can protect yourself, tell-tale signs you should watch out for and ways to truly seek assistance.

The Mortgage Assistance Relief Services Rule

The Mortgage Assistance Relief Services (MARS) Rule makes it illegal for companies to collect any fees until a homeowner has actually received an offer of relief from his or her lender and accepted it. The FTC’s MARS Rule gives the homeowner certain rights and sets out requirements for people who sell mortgage assistance relief services.

Please Note the Following Per the FTC:

You don’t have to pay any money until the company delivers the results you want. It’s illegal for a company to charge you a penny until:

  1. it’s given you a written offer for a loan modification or other relief from your lender; and
  2. you accept the offer. The company also must give you a document from your lender showing the changes to your loan if you decide to accept your lender’s offer. And the company must clearly tell you the total fee it will charge you for its services.

Companies must disclose key information. The Rule requires companies to spell out important information in their advertisements and telemarketing calls, including that:

  • They’re not associated with the government, and their services have not been approved by the government or your lender;
  • Your lender may not agree to change your loan;
  • If a company tells you to stop paying your mortgage, it also has to warn you that doing so could result in your losing your home and damaging your credit.
  • Companies can’t tell you to stop talking to your lender. You should always feel free to contact your lender directly to see whether they can offer you additional options. Companies that tell you otherwise are breaking the law.

If a company doesn’t follow these rules, it could be trying to scam you.

The FTC Also Notes the Following

Some lawyers may offer to help you get a loan modification or other mortgage relief. Under the MARS Rule, lawyers can require you to pay an upfront fee, but only if:

  • They’re licensed to practice law in the state where you live or your house is located;
  • They’re providing you with real legal services;
  • They’re complying with state ethics requirements for attorneys; and
  • They place the money in a client trust account, withdraw fees only as they complete actual legal services, and notify you of each withdrawal.

Unfortunately, some people advertising mortgage assistance relief services falsely claim to be getting you help from lawyers. So before you hire someone who claims to be an attorney or claims to work with attorneys, do your homework.

Get the name of each attorney who’ll be helping you, the state or states where the attorney is licensed, and the attorney’s license number in each state. Your state has a licensing organization – or “bar” – that monitors attorney conduct. Call your state bar or check its website to see if an attorney you’re thinking of hiring has gotten into trouble. The National Organization of Bar Counsel has links to your state bar:

Ask relatives, friends, and others you trust for the name of an attorney with a proven record of getting help for homeowners facing foreclosure.

Beware of attorneys who make bold promises or try to pressure you into hiring them.

Warning Signs Per the FTC

If you’re looking for a loan modification or other help to save your home, avoid any business that:

– guarantees to get you a loan modification or stop the foreclosure process – no matter what your circumstances;

– tells you not to contact your lender, lawyer, or housing counselor;

– claims that all or most of its customers get loan modifications or mortgage relief;

– asks for an upfront fee before providing you with any services (unless it’s a lawyer you’ve checked out thoroughly);

– accepts payment only by cashier’s check or wire transfer;

– encourages you to lease your home so you can buy it back over time;

– tells you to make your mortgage payments directly to it, rather than your lender;

– tells you to transfer your property deed or title to it;

– offers to buy your house for cash for much lower than the selling price of similar houses in your neighborhood; or

– pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

I hope that these tips and warnings help you be more circumspect in the face of scam artists and other dishonest people and companies looking to cheat you out of your home and property. However morally reprehensible, these people are out there, and we need to work to protect ourselves from them.

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