Since the onset of the foreclosure crisis, we are all bombarded daily with TV and radio ads, billboards, signs on top of taxi-cabs, internet spam email, direct mail and even phone calls offering "mortgage assistance." The services offered vary, including:
- "forensic loan audits"
- "foreclosure consultants"
- "mortgage relief"
- "foreclosure assistance"
- "loan modification"
- "short sale negotiators"
This has become a tremendous problem, as people desperate for help have paid money to "consultants" who promise them the impossible, take their money, and do not deliver. These problems have become so severe that many states have enacted laws making the offering of such services illegal. Included below are some links to the websites of Attorneys General (of California, Florida, New York, Illinois, Texas, Ohio, Colorado and Arizona) detailing some of the scams and some of the enforcement actions that have been taken. These are just a sampling of what is going on around the country (see below).
While not a complete list, it should be obvious from the above that there is a tremendous problem facing consumers from the providers of these "services." It is critical to understand that there is no magic bullet to solve a foreclosure-related problem, so any service which makes great-sounding promises should immediately arouse your suspicion.
Only attorneys are qualified to give legal advice!
No one but an attorney is allowed to give you legal advice. The process of solving a mortgage-related problem is not simple, and no one can make any legitimate promises. However, with the huge number of foreclosure-related problems, there are many predatory "service providers" making great sounding but completely untrue promises, taking advantage of the fear and desperation of so many people in this situation. I am also hearing far too often of realtors promising potential sellers they will not have to worry about deficiency judgments. In states where deficiency judgments are available, this is very dangerous and untrue. (For detail on what a deficiency judgment is see this Legal Guide.)
It is impossible to overemphasize how complex this area of law really is. Even when I speak to groups of lawyers, I bring along charts and slides just to try to demonstrate to them the inner workings and relationships necessary to understand foreclosure issues. It is simply not possible for non-attorneys to be able to make such an evaluation, even if they are honest, and it should be evident from the above ten Attorney General websites what a huge problem there is with mortgage "rescue" scams of many kinds and descriptions.
So, the bottom line is: don't do it. No matter how great the promises sound, no matter how badly you need a solution, don't be a sucker. The ONLY safe way to proceed is to consult an attorney who really understands all the nuances of financial services litigation and bankruptcy to hear all the details. While it is difficult to explain why in the context of this Legal Guide, there are times when a bankruptcy proceeding can do a great deal to assist with a mortgage-related problem, and there are other times when it may do nothing at all. It is critical to speak to an attorney who knows which is which, who can navigate this difficult trail and can figure out what might work, what is not likely to work, how and why, and what is likely in terms of expense. It is impossible to make good decisions without good information. Don't shortchange yourself.
Foreclosure Fraud Charges in California
California Real Estate Forensic Loan Audit
Florida - Protecting Yourself from Mortgage Fraud
New York Foreclosure Rescue Scams
Texas Foreclosure Rescue Scams
Illinois Foreclosure Rescue Scams
5 Tips to Avoid Being Scammed
Ohio Foreclosure Rescue Scams
Arizona Foreclosure Resource Center
Colorado Foreclosure Rescue Scams