News Column

The Philadelphia Inquirer On the House column

August 24, 2014

By Alan J. Heavens, The Philadelphia Inquirer

Aug. 24--The bottom line on mortgage modifications is simple: They're very complex, and the rules change daily. At the very least, it's best to work with a HUD-approved counseling agency, to have someone look over your shoulder.

Today, we open the continuing-problems file to foreclosure-relief scams.

Yes, there are still schemers out there preying on homeowners in trouble.

Recently, the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission, and 15 states initiated action against three firms that allegedly collected more than $25 million in illegal advance fees "for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages."

In one case, the feds allege, two companies and their principals offering legal services took in more than $19.2 million in fees from 10,000 distressed homeowners nationwide, with most, if not all, of that money coming from illegal advance fees for so-called loan-modification services. Two of the firms were based in California and Florida -- states that suffered high foreclosure rates in the years after the housing bubble burst.

The government said these accused scammers used deceptive marketing to persuade thousands of homeowners to pay millions in illegal, upfront fees for promised mortgage modifications. Each was a law firm or was associated with one.

Federal law bans law firms, except under very limited circumstances, from requesting or receiving payment from a homeowner for help obtaining foreclosure relief, such as a mortgage modification, before that homeowner has signed a modification agreement with a lender.

In these cases, the government said, the defendants disguised their false promises of foreclosure relief for struggling homeowners with claims that they were performing legal work.

Efforts on the national and state level to stop such abuses appear to have had mixed success thus far.

No matter how often such situations are reported in the media, people are desperate enough to let these operators into their lives, with the result that they steal what little money is left.

The CFPB recommends that homeowners obtain help from their mortgage servicers or from HUD-approved housing counselors at no cost.

From what counselors and others tell me, mortgage servicers themselves are still the source of many problems for consumers, so I would suggest looking for an approved counselor. Go to

There are no guarantees. Too many people let their financial problems fester for months, missing the brief window of opportunity for negotiating with their lenders. Then, by the time the borrower reaches the mortgage-counseling agency, little can be done to keep the borrower from losing the house.

Word of advice: Just because you don't open the letters your lender sends doesn't mean your problems will go away.


Here are some warnings about foreclosure-rescue scams, provided by the federal Making Home Affordable Program:

Beware of anyone who asks you to pay a fee in exchange for counseling or loan modification.

Beware of people who pressure you to sign papers immediately, or who try to convince you that they can "save" your home if you sign or transfer the deed.

Do not sign over the deed to your property to any organization or individual unless you are working directly with your lender to forgive your debt.

Never make a mortgage payment to anyone other than your mortgage company without its approval.

Don't wait to act.

215-854-2472 @alheavens


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Source: Philadelphia Inquirer (PA)

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