At a time when millions of financially struggling homeowners are desperate to postpone or prevent foreclosure, disreputable mortgage relief companies come to the rescue with false promises.
Based on a Federal Trade Commission recommendation, a U.S. district court has halted operations of Consumer Advocates Group Experts, LLC, a company that convinced homeowners to pay between $1,995 to $2,590 for “forensic audits” to avoid foreclosure and renegotiate their mortgages.
The defendants allegedly promised reduced interest rates and lower monthly mortgage payments and told consumers that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.”
Consumers claim the defendant told them:
- to stop contacting the lender because it would hinder the negotiation process and, sometimes, to stop making monthly payments;
- there was a 100% chance that the defendants’ “forensic audits” would uncover violations of federal and state mortgage and credit laws, and that consumers would receive either a loan modification from their lenders or a refund from the defendants; and
- the defendants’ negotiations with the consumers’ lenders could lower their mortgage payments by 50%.
Even after paying the fees, most complaints indicate that consumers often did not receive loan modifications or reduced payments, and that the company refused to return any attempts to contact them, essentially taking the money and running. Worse yet, the company put consumers at risk of losing their homes and damaging their credit ratings.
To help consumers spot a scam before they are victims, the FTC says to avoid any business that:
- guarantees to stop the foreclosure process regardless of the financial circumstances;
- instructs consumers 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 homeowners to lease their home so they can buy it back over time;
- recommends mortgage payments be made directly to the company, rather than the mortgage lender;
- urges transferring the property deed or title to the company;
- offers to buy the house for cash at a fixed price that is inappropriate for the housing market;
- pressures homeowners to sign papers they read thoroughly or that they don’t understand.
Follow Elise Rambaud Marrion on Twitter@emarrion_cmn.