Back in 2008, as the United States and millions of homeowners faced the real estate crisis, a multitude of new companies across the country came out of nowhere offering loan modifications and “foreclosure rescue services”, which aimed at helping consumers that were behind on their home loans. On the verge of default and foreclosure, desperate homeowners flocked to these companies hoping to keep themselves out of trouble, and also hoping to keep themselves inside their homes. Sure, some of these companies were legitimate, but many many more were not, and in turn they ended up ripping off literally thousands of Americans across the country that were struggling helplessly.
Then, in 2009, the government stepped in and for the most part shut down many of the firms that were fraudulently offering these loan modifications to the public. All was well (for a while) until a new scam recently came about……Forensic Mortgage Audits.
Just like the Loan Modifications of the past, these loan audits claim to help consumers out of their mortgage troubles by identifying any illegalities performed by your lender, broker, or other parties in conjunction or associated with the mortgage you obtained. Thus, in theory, forensic mortgage audits should be very helpful to homeowners.
Unfortunately (and regrettably) not all of these companies that make themselves available to you are actually qualified to provide audits. In fact, most loan audits these days are offered or performed by people without any legal training or attorney backing at all. These fraudulent businesses exploit consumers by selling mortgage loan audits that require you to pay a large upfront fee in exchange for a review of your mortgage to see if your lender complied with mortgage lending laws. They claim that if it turns out your loan was funded unlawfully you might end up being entitled to compensation, a refund of all interest and principal payments made for the last three years, all non-recurring closing costs, legal fees, or a renegotiation or modification of the terms of the loan.
But here’s the kicker. The FTC says it has found no evidence whatsoever that forensic loan audits will help you get a loan modification or any other foreclosure relief. In fact, the FTC even goes as far to say on their website that:
“Nothing could be further from the truth…according to its law enforcement officers:
• there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
• some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
• if you cancel your loan, you will have to return the borrowed money, which may result in you losing your home.”
So what can you legitimately do for help if you find yourself behind on your mortgage and facing the possibility of foreclosure? The best thing you can do is stay in touch with your loan servicer or lender. Whoever holds the note to your home would definitely rather work with you than have the property foreclosed upon. Many lenders will even offer you the chance to negotiate a new repayment schedule to get you back on track. The FTC also tells us that if you do decide to pursue a mortgage audit or any foreclosure relief system, make sure to BE CAREFUL, and avoid any business that:
• guarantees to stop the foreclosure process – no matter what your circumstances are
• instructs you not to contact your lender, lawyer or credit or housing counselor
• collects a fee before providing any services accepts payment only by cashier’s check or wire transfer
• encourages you to lease your home so you can buy it back over time
• recommends that you make your mortgage payments directly to it, rather than your lender
• urges you to transfer your property deed or title to it
• offers to buy your house for cash at a fixed price that is inappropriate for the housing market
• pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.
Also, if you think you’ve been in contact with a foreclosure fraudster, contact:
• Federal Trade Commission – www.ftc.gov
• Your state Attorney General – www.naag.org
• Your local Better Business Bureau – www.bbb.org
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