Today, we joined other federal and state partners in filing a lawsuit alleging that mortgage rescue scammers illegally defrauded consumers of $25 million in down payments. This reminds us how important it is to track down scammers who try to take advantage of people who need help avoiding fraud.
Federal law prohibits a law firm from requesting or accepting your help in obtaining foreclosure relief, such as a mortgage modification, before you sign a mortgage modification agreement with your lender.
In one case, two legal services firms and their directors collected more than $19.2 million in fees from more than 10,000 homeowners nationwide, much, if not all, of which was for illegal advance payments for so-called loan modification services.
warning sign
There are signs that a company claiming to provide legal lien relief isn’t worth your money. Watch out for these warning signs and ask more questions:
1. Request for advance payment.
If an attorney or person claiming to be providing legal aid wants you to pay up front before you get your amendment, they may be breaking the law. A licensed attorney may ask you to pay up front, but only if that attorney is licensed in the state where you live or your home state. Even an attorney licensed in your state can only accept a fee if you meet other requirements regarding fee schedules, deposit methods, and all other state laws and regulations.
2. Any claim for amendment is justified.
You must get the consent of your mortgage company before you can get a loan modification. A lawyer or someone claiming to provide legal assistance cannot guarantee that you will get a loan modification.
3. Forced sales.
Most practicing attorneys will not call or email you directly asking for immediate payment. If someone claims to be an attorney and asks you to sign documents or make a payment, ask questions to make sure it’s not a scam. The following guide can help you determine if it’s real legal aid or a foreclosure scam.
Third Party Licenses
Your mortgage company may ask you to authorize a third party to act on your behalf when seeking foreclosure help, so it is important to understand what this means for you. Only give permission to trusted third parties, and proceed with caution.
What can a server do?
Mortgage fraud is not only costly to consumers, but also to servicers and investors in the mortgage industry. We are releasing a new model third-party consent form as part of a credit fraud prevention effort by government agency representatives, consumer advocacy groups, housing counselors, and the mortgage industry. This form may be useful to mortgage servicers who choose to use all or part of it in conjunction with other existing forms. The new model form provides additional questions that help mortgage servicers build on their existing privacy and fraud controls by collecting information to make it easier to detect red flags for foreclosure fraud.
