Nearly all foreclosure rescue scams have one element in common: They charge massive upfront fees from their victims.
As a deterrent, most states have some sort of law in place banning advance fees, but since many exclude attorneys from the rule, that leaves firms open to hire in-house counsel to act as middleman.
The scary part is that it’s working. Here’s a recent example covered by the Employee Research Institute’s JD Journal:
“Anthony Blackwell, who is licensed to practice as an attorney in Nevada set up branches in New York and worked in collusion with mortgage modification company Homesafe America Inc, to extract thousands of dollars in upfront fees from homeowners, purportedly for loan modifications that were never made.”
Of course, once the cash was collected the business all but vanished, leaving homeowners hanging high and dry. Linda Mullenbach, senior counsel at the Lawyers’ Committee for Civil Rights Under Law, called it “part of a disturbing trend” and said she’s filed at least seven suits against similar schemes in New York’s Nassau County.
There’s a reason attorneys are left out of the upfront fee rule – plenty of legitimate law firms and non-profit housing agencies can and have helped homeowners modify their home loans.
In the wake of the robosigning scandal, at least 25 states are playing host to 30 mortgage modification programs and big banks are getting in on the action too. Bank of America is among the largest private lenders to launch its own outreach efforts and claims more than 50,000 borrowers have participated so far.
Congress-backed nonprofit NeighborWorks debuted a foreclosure mediation workshop in 2010 and is now one of the largest funders of foreclosure-mitigation counseling in the nation.
As always, check with the FTC before trusting any business with the keys to your home.