If you are behind in your mortgage or facing foreclosure, you may have been contacted by one or more companies promising to get your loan modified or your foreclosure stopped. Unsurprisingly, all you have to do is pay a hefty, up-front fee. Blanket guarantees such as these—especially with a large advanced sum—smack of dishonesty and should set off your scam alarm. Do not trust these companies, and certainly do not give them any of your money. Read on to learn about two common scams and your rights.
The FTC has been cracking down on many mortgage relief scams, which prey on vulnerable homeowners in financial distress. These relief scams violate the Mortgage Assistance Relief Services (MARS) Rule. Under the MARS Rule, mortgage assistance relief services must comply with the following:
- The company may not collect advance fees
- The company must disclose the amount of the fee
- The company may not tell the consumer to stop communicating with her lender or servicer
- The company may not make false, misleading, or unsubstantiated claims about its services
The company must also disclose up-front that:
- It is not associated with the government or the lender
- The lender may not agree to change the terms of the loan
- The consumer can stop doing business with the company at any time
- The consumer can accept or reject any offer from the lender
- If the consumer rejects the offer, she does not have to pay the company’s fee
These are just some highlights of the MARS Rule. While not every organization and person is bound by the MARS Rule (for example, some attorneys and non-profit organizations are exempt), companies that do not comply with the above requirements are prevalent. Two of the most common scams used by these companies are Forensic Loan Audits and Mass Joinder Lawsuits.
Forensic Loan Audits
Forensic Loan Auditors (also called Mortgage Loan Auditors, Foreclosure Prevention Auditors, Forensic Mortgage Loan Auditors, or some other variation) promise relief for distressed homeowners by auditing their mortgage documents. The companies say that your lender may not have complied with mortgage lending laws, and if that is the case, then you can use their report to avoid foreclosure, modify your loan, cancel your loan, and so on.
Do not believe these companies! There is no guarantee that an audit will do anything for you. Even if there is an error in your loan documents, and even if you sue your lender and win, your lender might not modify your loan. Scammers will lie about what an audit can or will do for you to sell you their services.
Mass Joinder Lawsuits
Many scammers lead homeowners to think that a “mass joinder lawsuit” is the answer to their mortgage difficulties. The homeowners are told that if they join others in suing the mortgage lender, they could stop their foreclosure, get money, or even get the title to their homes. The scammers collect a large advance fee for their “attorney” to review and pursue your case; but the advice, experience, and results are often sorely lacking.
Sometimes, suing your mortgage servicer does make sense, whether suing as an individual or as part of a class action. If you believe you are a victim of mortgage servicing fraud or abuse, a lawsuit may be appropriate. There is a proper way to consider this course of action, and there is a proper way to see it through. These mass joinder lawsuit scams are not the answer. A qualified, experienced attorney can evaluate your specific circumstance and help you make the best decision for you.