It is a violation of New York State law & Federal law for any non-attorney or an attorney not licensed in New York to collect an upfront fee to provide "mortgage assistance relief services" and/or "distressed property consulting services" (i.e. loan modification, forensic audit, loss mitigation) to a distressed New York homeowner, as such are defined & outlined in New York Real Property Law ? 265-b ("NYRPL ? 265-b") and 16 CFR Part 322 ("MARS Ruling"). These Federal and State laws were enacted as a response to the widespread consumer complaints filed by distressed homeowners whom were prayed upon and taken advantage of by unscrupulous individuals and companies that charged hefty fees for loan modification type services and really provided the clients with nothing more than false promises of hope.
Distressed homeowners should consider consulting directly with an attorney licensed in the state where the property is located and whom specializes in foreclosure law and loss mitigation.
2. Forensic Loan Audit Scam
Many companies state that for a small cost (aka high fee), a Forensic Loan Audit ("FLA") or Mortgage Securitization Analysis ("MSA") will uncover an array of illegalities in the underlying loan documents (i.e. the Mortgage and Note) that will force a loan servicer to either void the obligation in its entirety or give a distressed homeowner a favorable settlement/loan modification.
Not only are the above referenced claims false, but an individual or company soliciting FLA's or MSA's for a fee is directly violating Federal Law (i.e. MARS Ruling). Aside from being illegal, a FLA and MSA should be provided by any competent attorney as a part of any representation of a distressed homeowner concerning a foreclosure defense or loan modification.
Without the assistance of competent legal counsel, for the majority of distressed homeowners; a FLA or MSA will provide absolutely no benefit in negotiating with his/her loan servicer nor will it assist him/her as a "Pro Se" litigant in Court.
3. Mass Joinder Lawsuit Scam
This scam involves a network of individuals and/or companies providing advertising and marketing solicitation on behalf of a lawyer/law firm that which represents to distressed homeowners that they can be a part of a class action lawsuit against banks and mortgage companies to recover monetary damages for alleged illegal acts performed by the banks and mortgage.
The appeal of this scam is that many distressed homeowners do feel in some way that they have been victimized in/through a mortgage process. The mass joinder lawyer/law firm representing the class of distressed homeowners charges victims a "consultation fee", usually thousands of dollars to qualify the victim as an eligible class member.
The fact of the matter is little to none of these mass joinders have ever even been filed in a Court of law, and for the ones that have; most have been defeated & dismissed.
Every situation is different and homeowners usually benefit more through free consultation w/ local counsel.
4. Mortgage Elimination Scam
This scam solicits distressed homeowners by alleging that a mortgage debt can be eliminated through the use of specially prepared documents. The organizers of this scam concoct a wide assortment of ridiculous quasi-legal documents based on some version of the claim that the mortgage was an unenforceable instrument and that if the mortgage bank and various other government agencies do not respond to a series of mailings and recordings in a certain period of time that mortgage is then nullified and the debt voided.
Although poised in many different forms, all mortgage elimination schemes charge their victims thousands of dollars for assisting them in constructing and mailing the bogus legal forms, which usually cite obscure passages from government publications, statements by politicians, constitutional provisions, court decisions, and various statutes.
In fact, not one of these elimination scams have ever assisted a distressed homeowner void a mortgage debt. Do not be fooled!
5. Deed Scam
This scam has many different versions, but relatively speaking; they all conclude with a distressed homeowner signing over the deed to his/her property. What makes this scam appealing to its victims is that unlike other scams; this scam usually involves the scammers paying the victim money rather than the victim paying the scammers money.
Being that this type of scam is performed in so many different ways, the simplest way to avoid becoming the victim of a deed scam is to consult with an independent and trusted attorney before signing any legal documents involving the distressed homeowner's real property (i.e. Deed) or him/her as an individual (i.e. Power of Attorney).
Unfortunately, many attorneys wind up being the "mastermind" behind a deed scam so when seeking legal advice about any legal documents involving a distressed homeowner or distressed real property; it is prudent to consult with an competent attorney not involved or associated with the transaction.
Additional resources provided by the author
In general, aside from seeking the advice of competent legal counsel when dealing with matters concerning foreclosure; a distressed homeowner in the State of New York can find additional information and resources from the:
- New York State Attorney General
- U.S. Department of Housing and Urban Development
- Consumer Financial Protection Bureau
- Federal Trade Commission
- New York State Department of Financial Services
- local HUD approved not-for-profit organizations
- local Bar associations