This is good information for consumers considering a Mortgage Modification. Please read this post and also the READ MORE . . . . . . link.
FTC Issues Final Rule to Protect Struggling Homeowners from Mortgage Relief Scams
Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures
Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.
LOAN MODIFICATION COMPANIES promise the moon, but deliver little to nothing. IMO, if viable relief for homeowners in distress were available, these companies would never have existed with their false promises and free rein to scam the most volunerable.
You've heard the very clever advertisements:
FHA LOAN MODIFICATION - Gives the impression that they are affiliated with FHA, which they are not but might appeal to home owners with an FHA loan.
GOVERNMENT APPROVED LOAN MODIFICATIONS - The appearance of a government affiliation again. Not true, but desperate people are the easiest to persuade.
EXPERIENCED ATTORNEYS offer loan modification - Often the company doesn't even employ an attorney. Then OTOH, many are owned and operated by attornys.
SAVE YOUR HOME WITH MORTGAGE MODIFICATION - That promise makes their phone ring and well trained sales people do the rest.
STOP MAKING YOUR MORTGAGE PAYMENTS is probably the most harmful advice from these scam artists. Bad enough when the mortgage company requires that destructive act before they'll even discuss modification or short sale. Worse when it comes from an entity that has no authority to modify or represent the home owner in distress.
NOTE: It is not only home owners in distress that are being bomparded by the loan modification ads. MANY HOMEOWNERS WHO ARE "UNDER WATER" are also susceptable to these scams. (Suggested by Paula Hathaway in her comment below). My focus was on the home owners in distress, but Paula is right. Home owners who owe much more than the market value of their home are also getting mailings for loan modification and they hear to radio ads too.
WHAT TOOK THE FTC SO LONG?? Let's see now. We're about 3 years into the mortgage mess and these mortgage modification scam artists have been advertising widely all this time. Attorneys General of many states have been on top of this matter for over a year. HOWEVER, the radio ads cross the state lines and are heard by many home owners in distress. HA! Telephone conversations have no state boundaries either.
BETTER LATE THAN NEVER. We'll see how this turns out. Hopefully it will be more help to the housing industry than the various government programs offering loan modifications which were no more than MISERABLE FAILURES.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
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