BBB Warns Consumers about Mortgage Relief Companies
New FTC Rule Designed to Protect
Distressed Homeowners
Austin, TX - November 24,
2010 – As the U.S. mortgage crisis continues to affect thousands of
American homeowners, the FTC is working to cease numerous mortgage relief
service scams that prey on consumers behind in their mortgage payments or
facing foreclosure. Bogus operations falsely claim that, for a fee, they will
negotiate with the consumer's mortgage lender or servicer to obtain a loan modification,
a short sale or other relief from foreclosure. BBB warns consumers who are struggling with
the financial responsibilities of owning a home to take careful precautions
with regards to mortgage relief services in order to avoid becoming a victim of
the prevalent deceptive practices.
To
illustrate the high demand for mortgage relief services, BBB reports that thousands
of homeowners in distress from across the country have contacted BBB for
information on a Maryland-based mortgage relief business called Residential Relief
Foundation. However, BBB processed a total of 62 complaints about
Residential Relief Foundation in the last year, including complaints from local
Texas consumers. The FTC announced last Friday that a federal court has shut down
the company's operations and seized its assets, ending what it alleges were
deceptive practices designed to mock government mortgage assistance programs. A
copy of the federal court order against the company can be found online here. A copy of the FTC press
release is available here.
To further protect distressed homeowners from the rising number of
mortgage relief scams, the FTC also announced last week that it is issuing a
new rule titled the Mortgage
Assistance Relief Services (MARS) Rule. The new rule 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. The rule
will go into effect on December 29, 2010.
BBB offers the following tips
for homeowners seeking mortgage relief service:
· Consider up-front fees as a red flag. The new FTC rule will ban
up-front fees effective December 29, 2010.
·
Do not be fooled by clever marketing ploys or seals designed to
make the company or its services look like it is part of a government program.
·
Try to work out a foreclosure rescue scenario yourself by talking
directly with your lender. Explain your situation and ask for a revised
repayment schedule.
·
Do not sign away the title of your home and make sure you have
your own attorney review a contract before you sign.
Before you endorse a contract to a mortgage rescue company, visit bbb.org for an indication about the company's history, record of performance
and business practices.
To
check the
reliability of a company and find trustworthy
businesses,
visit BBB.
About Better Business Bureau:
BBB's mission is to be the leader in
advancing marketplace trust. BBB accomplishes this mission by creating a
community of trustworthy businesses, setting standards for marketplace trust,
encouraging and supporting best practices, celebrating marketplace role models
and denouncing substandard marketplace behavior.
Businesses that earn BBB
Accreditation contractually agree and adhere to the organization's high
standards of ethical business behavior. BBB is the preeminent resource to turn
to for objective, unbiased information on businesses and charities.
Contact BBB serving
Central, Coastal and Southwest Texas at (512) 445-4748.
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