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Many homeowners were hit hard in the recession, as they fought to stay in their homes amid job losses and declining incomes.
And sadly, those struggling homeowners have become easy marks for “mortgage rescue” con artists.
American homeowners have lost millions to mortgage modification scams in recent years. In a typical scam, the homeowner is promised they’ll get a new loan with better terms if they first pay a large, upfront fee and then continue to send payments to the modification company.
Here are three red flags of a mortgage rescue scam:
The Federal Trade Commission’s Mortgage Assistance Relief Services (MARS) Rule makes it illegal for a company to collect any fees until the homeowner has actually received an offer of relief from his lender and accepted it.
But be careful. Some shady operators have tried to get around the MARS Rule by falsely saying they are working with a lawyer. That’s because lawyers are allowed to accept upfront fees for legal work. If you want to hire an attorney to help you with financial issues, make sure he or she is licensed to practice law in your state, and check out the lawyer’s disciplinary record with the state bar association. Ask friends and relatives to recommend a trusted attorney who has experience in helping people with foreclosure issues.
If you’re in over your head financially, contact your lender or get help from a HUD-approved housing counselor at MakingHomeAffordable.gov.
And remember: Never send your monthly mortgage payment to an outside company that claims it will modify your loan. Your loan payments should go to your lender.