Tips and Advice on Mortgage Aid Scams

CTLN

Don’t fall victim to companies that prey on unsuspecting consumers with attractive offers. As outlined in the CTLatinoNews.com article, Latino Family Claims They Are Target of Foreclosure Aid Scam, these firms can bilk consumers for thousands of dollars, deliver no services, and end up with homes lost to foreclosure.
Here is advice culled from the Connecticut Department of Banking website. Contact the banking department if you feel you have been the victim of mortgage aid firms that have charged you illegally high fees and/or not delivered the promised services to you.
The state Department of Banking advices that if you feel you have been the victim of a mortgage aid scam, you should call its Consumer Affairs Division at 860-240-8170 or 800-831-7225.
1. The Department of Banking licenses “Debt Negotiators.”  Licensed Debt Negotiators, for a fee, offer the services of assisting a consumer faced with significant debt or negotiating on behalf of a consumer, the terms of a consumer’s obligation to a mortgagee or creditor, including:

  • Negotiation of a short sale of residential property (one to four family owner-occupied real property);
  • Providing services related to avoiding or delaying actual or anticipated foreclosure proceedings; and
  • Addressing the delinquency and default of a mortgage loan.

No fees may be received until the Debt Negotiator fully performs the services.
2. People in foreclosure are frequently targeted for “foreclosure rescue scams.” Be very careful of non-lawyers who ask you to pay a fee for a counseling service, modification of an existing loan, or foreclosure prevention, or claim to be able to perform a “forensic audit” of your loan documents, regardless of their promises or claims. Many out-of-state attorneys target Connecticut residents: you should never pay attorneys that you do not meet. For more information, contact the Department of Banking or visit the following websites: Prevent Loan Scams and Loan Modification Scam Alert.
3. Debt Negotiators are required to provide in each debt negotiation contract the following consumer protections:
• Complete and detailed lists of services, costs, and statements of the results to be achieved.
• A statement that the Debt Negotiator has reviewed the consumer’s debt and an individualized evaluation of the likelihood that the debt negotiation services will reduce the consumer’s debt or, if applicable, prevent foreclosure of the consumer’s home.
• A three-day right of rescission along with the statement: “If you wish to cancel this contract, you may cancel by mailing a written notice by certified or registered mail to the address specified below.  The notice shall state that you do not wish to be bound by this contract and must be delivered or mailed before midnight of the third business day after you sign the contract.”
Note:  ” Business day” means any calendar day except Sunday or any of the following business holidays: New Year’s Day, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving, and Christmas.
Any debt negotiation contract that does not comply with Connecticut Banking Law will be voidable by the consumer.
4. Be aware of foreclosure rescue scams that target homeowners having serious problems making their mortgage payments.  In these “rescue” scams, a con artist promises to help you save your home, but is actually intent on stealing your home or most of the equity you have accumulated in your home.
According to the Federal Trade Commission, the following predatory scams have been reported:

  • The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges hefty fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions result in saving the home.  Turning to a HUD-approved counselor for assistance is one way to avoid this type of fraud.
  • The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
  • The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

5. The State of Connecticut Department of Banking Foreclosure Hotline was established on August 24, 2007 in response to the subprime mortgage crisis, and was the third foreclosure hotline created in the country.  Connecticut residents who are behind in their mortgage or are facing foreclosure on their homes may call the Foreclosure Hotline toll-free at 1-877-472-8313 to receive advice and guidance regarding their mortgage issues and their foreclosure case status.  Our mission is to ensure that we communicate in a timely basis all the state and federal programs that you may qualify for and all the state and federal agencies that may be of assistance to you.
More advice about mortgage aid scams and foreclosure advice is available at the state Department of Banking website and the Federal Deposit Insurance Corp. website.