73ºF

Call Christina Web Extra: Mortgage relief scams

Attorney Jason Weaver explains red flags to spot in home loan modification industry

PEMBROKE PARK, Fla. – Consumer protection attorney Jason Weaver explains the "red flags" to spot in the home loan modification industry:

LOAN MODIFICATION MILLS:

"There are huge companies that prey on homeowners in trouble. They have mailing lists for when homeowners have foreclosure sales and they blast mail them and they purposefully seek out people that have already had judgements or very close to foreclosure sale and they are desperate and they are scared. These companies are huge mills that promise things and they know you are going to pay them anything because at that point you are desperate to save they house. They prey on people. Sometimes they may even look like they are a law firm, they may be a legitimate law firm but they also may not they may subcontract out to other attorneys to handle your case."

'Be very wary. If you give money to these people who are promising things to you, be very wary that your money is going to where they say it is going. Be aware that if they say they are hiring an attorney for you that that attorney actually works with them and is not just subcontracted out. Don't take empty promises, particularly if you are very late in the foreclosure game. If there is judgment already out there,  a foreclosure sale, when somebody starts promising you things that late in the game as a guarantee that should be a red flag that something is wrong. Many of these companies will promise anything and everything just to get your money."

"There's no legal limitation on what a lawyer can charge for a service but the charge has to be reasonable. If the charge that attorney charges is not reasonable it is an unethical fee. That's not to say that nothing can be done late in the foreclosure case and if you are there you should seek out legal help, better late than never, just be wary of empty promises and huge fees when you are late in the foreclosure game.'

"A lot of these companies have been put out of business by the Florida Attorney General's Office – some of them have been disciplined by the Florida AG's Office but they are still in business, or maybe they have changed their name just to stay in business so always check the Florida Attorney General's Office as well as the Better Business Bureau about complaints about these companies."

"An attorney in house knows your case, an attorney in house is handling your file, you know somebody is looking at it and somebody's is accountable for you. You know you are not going to get one story from the company and a totally different story from the attorney. They are all generally going to be on the same page. And there's accountability when the attorney is actually working for you and you have a retainer agreement with the exact attorney that's representing you there's accountability for you."

"If you are that late in the foreclosure process and you need help find a real practicing foreclosure defense attorney or loan modification attorney. Local bar associations have referrals, the Florida Bar has referrals, the National Association of Consumer Advocates has a database of attorneys who actively practice in this, they are not mills, they handle clients individually so there are places to find real legal help you just have to be careful that you are finding a real law firm and not just a large mill."

TOP THREE SIGNS THE COMPANY IS OPERATING AS A LOAN MODIFICATION MILL

1)      The attorney that is assigned your case doesn't actually work in the same office as the company that you hired.

2)      The fees seem exorbitantly high

3)      You either never get to talk to a lawyer or the person that's speaking to you in that office is making promises that just look like they are unreasonable.

In 2011, the Federal Trade Commission's Mortgage Assistance Relief Services (MARS) Rule took effect. It was designed to protect homeowners from mortgage relief scams. It included a ban on upfront fees until a homeowner has received and accepted an offer.

"Banning the collection of up-front fees will protect homeowners from being victimized," FTC Chairman Jon Leibowitz said. "This is especially important at a time when so many people are behind on their mortgages or facing foreclosure."

In a news release the FTC explained that under the MARS rule, "a mortgage assistance relief company may not collect a fee until the consumer has signed a written agreement with the lender that includes the relief obtained by the company. When the company presents the consumer with that relief, it must inform the consumer, in writing, that the consumer can reject the offer without obligation and, if the consumer accepts, the total fee due. Before the consumer agrees to accept the mortgage relief, the company must also provide a written notice from the lender or servicer showing how the relief will change the terms of the consumer's loan (including any limitations on a trial loan modification)."

There is an attorney exemption: "Attorneys are generally exempt from the rule if they provide mortgage assistance relief services as part of the practice of law, are licensed in the state where the consumer or dwelling is located, and comply with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must also place any advance fees they collect in a client trust account and abide by state laws and regulations covering such accounts."