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With no end to the foreclosure crisis in sight, it’s no wonder consumers are still falling for shady mortgage relief scams.They’re desperate to keep a roof over their head and even banks are struggling to keep up with their needs.
Just this week, six defendants agreed to hand over a combined $6 million to settle FTC charges they ran bogus businesses claiming they’d help consumers claw their way out of foreclosure.
Call it an FTC victory or whatever you like, but the case highlights how just how susceptible homeowners can be to fraud when they find themselves on the brink of losing their homes.
The victims who fell for this scam missed several red flags along the way.
First of all, the defendants claimed their companies were part of a government-backed mortgage relief program called “U.S. Homeowners Relief.”
Although the Obama administration did launch a relief organisation for struggling homeowners in March 2010, a simple web search would have shown them it was never called U.S. Homeowners Relief.
It was part of the Making Home Affordable program, which offered consumers loan modification assistance through the Federal Housing Administration.
The next red flag was that the so-called “relief” company declared a 90 per cent success rate. That’s a big no-no since the FTC made it illegal to sway consumers with misleading advertising.
Now for the kicker: They also asked for $4,250 upfront from their clients–before they even rendered services. That’s also illegal.
Once you’ve handed over that check, the damage is pretty much done. Sure, they’ll promise to refund the cash if they don’t get your payments and interest rates lowered, but by the time you realise they’re a fake, they’ve already taken off.
In this case, the defendants cut their phone lines, stopped answering their clients’ emails and changed their business’ name.
If you believe your home was foreclosed in error, it’s not too late to submit to the government’s independent foreclosure review. It’s open to 4.5 million homeowners and all submissions are due by April 2012.
If you’ve dealt with a loan modification business you feel is up to no good, alert the FTC or call 1-877-FTC-HELP (1-877-382-4357).