At least once a week, my foreclosure defense office receives a call from a distressed homeowner who has been paying a ‘loan modification company’ for help, haven’t gotten the promised modification and/or just received a foreclosure notice from their lender.
With foreclosure rates consistently high, these loan modification companies prey on homeowners offering ‘guarantees of rescue’ and quick modifications. It seems most of the companies are located or originate from Florida.
By the time the distressed homeowner realizes they’re no closer to receiving a loan modification, they’ve paid 5 to 9 months of payments (conveniently and automatically debited from their accounts). These companies debit the homeowner anywhere from $700 to $1,500 a month for ‘assistance’ in getting a loan modification. It is illegal for these companies to collect upfront fees.
Homeowners, desperate to keep their homes often pay out an additional $2,000 to $4,000 for a forensic audit – provided by the company’s “team of experts”. These companies promise homeowners they can find errors in mortgage documents and can get the lender to reduce monthly mortgage payments – or even cancel your mortgage altogether.
A forensic audit, sometimes called forensic accounting, is nothing more than tracking and collecting evidence, usually to investigate and prosecute a criminal act such as embezzlement or fraud. When a client meets with me during a consultation, I scrutinize his documents in detail to find any wrongdoing the lender may have committed. A forensic audit is hardly ever warranted and there’s no proof a forensic audit would help, in any way to reduce, alter or stop a foreclosure.
The Federal Trade Commission (FTC), our nation’s consumer protection agency, has a Rule in place to protect all homeowners. The Mortgage Assistance Relief Services (MARS) Rule makes it illegal for these companies to collect any fees until a homeowner has actually received an offer of relief from his or her lender and accepted it. Plainly said – you don’t have to pay any fees to these so-called loan modification companies until you get the results you want. It is illegal for these companies to take any kind of upfront money from you, let alone debit your bank account each month.
Under the MARS Rule, an attorney can require an upfront fee only if:
– the attorney is licensed to practice law in the state where you live or where your house is located
– the attorney is providing you with real legal services
– the attorney is complying with state ethics requirements for attorneys
– the attorney places the money in a client trust account, withdrawing fees only when they complete actual legal services
As a licensed, established and practicing attorney by the State of Colorado, I have sworn and taken an oath to follow all the rules, regulations and laws of Colorado and of the United States.
Many of these companies claim to be affiliated with the government. Websites are often designed to make these scammers look like they ARE the government. ALL government websites end in .gov and not a .com or .net. These companies pay designers to make their websites, brochures and flyers look official.
Lenders don’t work or negotiate with these phony counseling or foreclosure rescue companies, but lenders do work with legitimate attorneys.
If you are facing foreclosure, in the process of foreclosure or even if you’ve already been foreclosed, there are legitimate options you can explore in order to save your home.
A qualified, licensed Foreclosure Defense attorney can examine your case and make lawful decisions on your foreclosure, short-sale or loan modification and can negotiate terms with your mortgage lender.
These phony companies may tell you you’re working with a ‘qualified attorney or paralegal’. You have no proof that person is anything other than a good salesman working the scam. Do your homework – get the name of the attorney, check with your state’s “bar” (licensing organization) to ensure that attorney is even licensed to practice law in your state– or is even an attorney at all.
Stay away from anyone or any company giving guarantees, making any type of bold statements, promises or tries to pressure you. Avoid people with titles such as: Foreclosure Consultant, Mortgage Consultant, Forensic Loan Auditor, Loan Modification Consultant, Foreclosure Prevention Specialist or Short Sales Negotiator.
If you think you’ve been the victim of foreclosure fraud, contact your state’s Attorney General’s office and/or the Federal Trade Commission.
Keith A. Gantenbein, Jr. is a licensed, Colorado foreclosure defense attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes foreclosure prevention, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant. If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.