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Nancy Starczyk: Beware of rip-off scams

Posted: July 30, 2014 2:00 a.m.
Updated: July 30, 2014 2:00 a.m.

 

A joint federal-state task force announced a sweep Wednesday to shut down foreclosure relief schemes that duped thousands of Southern California home owners who were already struggling to keep their homes.

Dubbed “Operation Mis-Modification” by the Federal Trade Commission, the combined effort included action by the federal Consumer Financial Protection Bureau that focused on deceptive marketing tactics used to rip off distressed home owners across the country.

The Bureau filed three lawsuits against companies and individuals who collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.

The CFPB said it will seek compensation for victims, civil fines, and injunctions against the scammers. Separately, the FTC filed six lawsuits and individual states took an additional 32 actions.

“We allege that consumers were lured by deceptive marketing, including inflated success rates, and false promises of legal advice,” said Steve Antonakes, deputy director of the CFPB. “Then, the companies illegally required consumers to pay up-front fees to begin the mortgage modification process.”

Often, consumers never received loan modification and were left in worse financial condition than when they began, Antonakes said.

One lawsuit alleges thousands of California homeowners paid initial fees ranging from $1,995 to $3,500, in addition to monthly fees of $495. Another lawsuit stated the initial fee was $6,000, plus an ongoing monthly charge of $495.

Thousands of consumers who were struggling to keep their home were promised prompt relief, action that never came.

For details, go to www/cfpb.gov.

Don’t Fall for Foreclosure Relief Scams!

Homeowners facing financial stress and the possibility of foreclosure need to be on high alert for scam artists seeking to exploit the situation. Here are warning signs of a scam, according to the federal Consumer Financial Protection Bureau.

Except in very limited circumstances, federal and state laws ban law firms from requesting or receiving payments to help consumers obtain foreclosure relief, such as a mortgage modification, before the homeowner has signed a mortgage modification agreement with the lender.

The CFPB and the Federal Trade Commission on July 23 filed legal action against two companies for taking in $25 million in fees from tens of thousands of homeowners, including thousands in Southern California.

Most, if not all, of that money came from illegal advance fees for so-called loan modification services that, in virtually all instances, were never completed, leaving the owner in even more dire straits than when they began.

The federal Consumer Financial Protection Bureau says warning signs of a scam include:

• Demands for payment up front. If a lawyer or someone claiming to offer legal help wants to be paid first—before a loan modification is completed—most likely they are breaking the law.

• Any claim that a modification is “guaranteed.” A homeowner’s mortgage lender must agree before an owner can get a modification. A lawyer or anyone claiming to offer legal help cannot “guarantee” an owner will get a loan modification.

• A hard sell. Be particularly wary of cold calls or e-mails promising a modification. If someone calls claiming to be a lawyer—attorneys generally do not call directly—and asks that the owner sign documents or make an immediate payment, ask many questions. It’s most likely a scam.

Remember, only authorized third parties can help a homeowner with foreclosure relief, and many do not charge any fee for their assistance. Ask for a written description of the legal services that will be provided. A HUD-approved housing counselor is available at no cost. To find a counselor, go on-line to: consumerfinance.gov/find-a-housing-counselor.

Nancy Starczyk is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors.

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