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When homeowners fall upon tough times, mortgage relief programs offer services such as a loan modification to help lower monthly payments and make them more affordable. However, during this stressful time consumers may become more vulnerable to scammers trying to take advantage of their situation.  Families falling behind on monthly mortgage payments and facing the possibility of foreclosure must be careful to avoid falling for a mortgage relief scam which could cost them money or their home.

Foreclosure and mortgage relief scammers claim they can negotiate with mortgage lenders or servicers to reduce mortgage payments or save homes from foreclosure if they are paid an upfront fee. According to the Federal Trade Commission, scammers often find homeowners in distress by reading public foreclose notices in the newspaper or on the internet, or by using a variety of advertising channels, such as fliers, TV ads, or door-to-door salesmen, and offering false promises of stopping foreclosure proceedings or quicker approval processes.

Common red flags for a mortgage relief scam:

  • They offer 100% Guarantees: A mortgage relief company or lawyer cannot GUARANTEE your loan will get refinanced; only your loan servicer or lender can refinance your loan. Any advertisements or letters sent to your home offering money back guarantees or total stops to foreclosure are false.
  • They require upfront fees: Federal law (the MARS Rule, also known as Regulation O) prohibits consumers from being charged for mortgage relief assistance until the consumer has signed an agreeable mortgage modification agreement with their lender. This means that even if you agree to have a company help you, you do not have to pay them until you actually get a loan modification result. The only exception to this law is if you are hiring a lawyer licensed in your state. The state-licensed lawyer can ask you to pay upfront only if they are completing legal work for your case. Call your state’s bar association to make sure your lawyer is licensed to practice in the state where you live.
  • They suggest you limit communication: Scammers will often tell you to stop any communication with your lender or reject your lender’s loan modification offer because they get you a better one. If a legitimate mortgage relief service tells you to stop communicating with your lender, they are in violation of Regulation O. Always keep the lines of the communication with your lender open. If you do have a lawyer representing you, ask to be included in all conversations with your lender or servicer.
  • They want you to pay your mortgage payments to them: Scammers insist that you pay your monthly mortgage payments to them while they negotiate with the lender. They collect your payments themselves and then run.
  • They offer quick solutions: Scammers may offer to find a buyer for your home, but only if you move out and transfer the property deed. This is not a solution. In reality, your lender keeps moving forward with the foreclosure, while your home is rented out. You will still be responsible for the unpaid mortgage.

Remember, legitimate companies offering mortgage relief or foreclosure relief assistance are required under Regulation O to disclose important information in their advertisements and telemarketing, including that they are associated with the government, and that their services have not been approved by the government or your lender; that your lender may not agree to change your loan; and that not paying your mortgage could result in your losing your home and damaging your credit.

Where can you turn if you need assistance?

 

The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation along with its five agencies work together to achieve two goals: to protect and empower consumers through advocacy and education and to ensure a fair playing field for Massachusetts businesses. The Office also oversees the state’s vehicular and customized wheelchair Lemon Laws and Arbitration Programs, Data Breach reporting, Home Improvement Contractor Programs and the MA Do Not Call Registry. Contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm. Follow the Office on Facebook and Twitter, @Mass_Consumer.

 

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