Foreclosure Rescue Scams

Many foreclosure rescue scams are just rip offs.  The promise to stop a foreclosure along with guarantees to do so abound.  No matter what the economic condition, scammers will find a way to prey on the weaknesses of people.

Recently a court in Tampa, Florida found a “rescue” company guilty as reporrted by The National Law Journal in an article, ”

Mortgage Foreclosure “Rescue” Service Settles FTC Unfair Trade Practices Lawsuit for $1.2 Million

 

On January 5, 2009, Florida-based Mortgage Foreclosure Solutions, Inc., agreed to a $1.2 million settlement with the Federal Trade Commision.  The FTC had sued the foreclosure “rescue” service in February 2008, alleging unfair and deceptive practices in violation of federal law.  The defendant claimed, in numerous webites and blogs, that it could stop mortgage foreclosures regardless of consumers’ payment histories or financial condition.  One promotion stated, “We are so confident of our abilities to provide you with a solution in stopping your foreclosure that we gaurantee our services in writing to you.”

The FTC’s complaint further alleged that consumers were charged an upfront fee of $1,200 after calling a toll free number and being interviewed about their mortgage foreclosure; regardless of their financial condition, consumers were told they qualified for a workout plan.  The FTC alleged that after receiving payment, the defendant failed to return consumers’ telephone calls, or that consumers were told the defendant was working on a solution or that no solution could be acheived after all.  The complaint stated that many consumers lost their homes to foreclosure, or that consumers prevented foreclosure through their own efforts.

Under the terms of the settlement filed in U.S. district court in Tampa, Florida, the defendant agreed to pay the FTC $1.2 million.  Because of the defendant’s lack of resources, the FTC agreed to suspend payment of all but $8,320 of the judgment, unless the defendant was later found to have misrepresented its financial condition.  The defendant also agreed to a list of conditions prohibiting future activities promising mortgage foreclosure “rescues.”

The FTC’s website, www.ftc.gov, contains a publication designed to assist consumers from falling victim to mortgage foreclosure “rescue” scams.  The publication advises that consumers avoid doing business with any firm that:

  • guarantees to stop the foreclosure process – no matter what your circumstances
  • instructs you not to contact your lender, lawyer, or credit or housing counselor
  • collects a fee before providing you with any services
  • 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 at a fixed price that is not set by the housing market at the time of sale
  • offers to fill out paperwork for you
  • pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.See “Facts for Consumers, Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress,” available at www.ftc.gov.
  • Beware of rescue scams including most Loan Modification services.  Loan Modifications for most don’t work.  They also offer guanantees of lowering your interest and payments and will allow you to avoid foreclosure.

    Many law firms are in the loan modification business today.  That is not to say that attorneys are scamming the public, most are not.  Just be aware that most people don’t qualify for a loan modification even if the servicing company is willling to do one.

    Fighting and defending a foreclosure legally is not the same as “rescue” or modification and there  is no guarantee that it will work.  However, given the case history and the actions of many attorneys operating “foreclosure mills”, there is a good chance that the Plaintiff – the party suing you for foreclosure – does not have the right to do so.

    What has been proven by case history, federal court decisions and other state court decisions, is that irregulariteis in filing by the Plaintiffs are being recognized by the courts.  They, often times can cure – correct – these irregularities but that takes time and time is what you need if you are facing foreclosure.

    More on Loan Modifications in a future post. 
    Also, go to:

    Foreclosure Rescue Companies – A new breed of swindler

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