Featured News 2012 Warning: Beware of Mortgage Relief Scams!

Warning: Beware of Mortgage Relief Scams!

If you get a phone call from an obscure third party offering you mortgage relief, watch out! According to the California State Department of Real Estate (DRE), scammers are on the prowl for gullible citizens who will buy into their lies. In California it is illegal to ask for an upfront fee on a loan modification, but most residents are not aware of this. When they get a phone call from a company that offers to modify their loans for a fee they can pay right away, some desperate people jump at the opportunity. Unfortunately, most often these scammers will hide away with your money and never complete your modifications; they make it very difficult to trace and repossess your cash.

According to a December 2011 news release, the DRE has filed more than 1,100 administrative actions against loan modification scammers just since 2009. Normally, the department will issue a Desist and Refrain Order to the telephone operator to curtail these calls. Sometimes the order is still not enough to stop the devious scammers. A real estate commissioner at the DRE says that the enforcement and administrative agencies need to come together and work towards protection. In the current economic downturn, many men and women are vulnerable to these offers as a possible way out of debt.

One of these scheming companies was recently found and punished. Green Credit Solutions Inc. is an illegitimate mortgage relief operation that stole millions of dollars from California residents by promising loan modification services. These services were completed. The Federal Trade Commission is partnering alongside the DRE to find and punish false loan modification companies. Also, they hope to enforce punishments that will curb further abuses.

In February, the U.S. District Court banned the mortgage relief business, and caught telephone phonies who were garnering up to $2,600 per victim. One false business was given criminal charges and forced to liquefy assets they bought with their false profits. After convicting these criminals, the FTC took further steps to crush illegal mortgage relief scammers with the MARS Rule. This new mandate bans providers of mortgage foreclosure rescue and modification service from collecting their dues until the homeowner has a written offer from their lender that is deemed acceptable. The FTC hopes that this new rule will be strictly enforced and save homeowners from falling into a financial downturn because of cruel telemarketing schemes.

Here are some practical tips to avoid a mortgage relief scam. It is illegal for a company to request an upfront fee for a loan modification. Therefore, any representative who asks you to pay a sum over the phone is not operating under California (or most states, for that matter) law. This is an immediate red flag, and you should report the scammer to local authorities, the FTC, or the DRE. As well, watch out for any promises that the operator claims will be a guaranteed success. No one can pledge that a loan modification will be a seamless and successful transaction, so somebody who claims this sort of fail-proof promise is probably being dishonest.

If you are contacted by a supposed loan modification company, ask questions. Probe the situation, get referrals, and target areas where the operator seems vague or unwilling to provide further information. If you need information about a loan modification, you can talk to a counseling agency, or a well educated lawyer. Also, watch out for other mediums that these companies could use to contact you. They may choose to contact through e-mail, traditional mail, or internet sites. Next time you get an offer for a loan modification watch out, it could be a scammer trying to wheedle you out of thousands of dollars. Consult with real estate attorneys or financial experts before falling for this offer.

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