Stopping a Phony Mortgage Lender
Many homeowners struggling to make mortgage payments look for practical payment alternatives: they might try to convince the lender to modify the loan terms, ask for a temporary reduction, or maybe try to refinance the loan. The Federal Trade Commission’s settlement with American Mortgage Consulting Group illustrates one alternative to stay away from: paying a company a fee to modify a mortgage before they deliver the results they promise.
The case is part of the FTC’s Distressed Homeowner Initiative, focused on shutting down sham foreclosure rescue schemes, bogus mortgage modification offers and other phony deals. According to the FTC’s complaint, American Mortgage called homeowners nationwide and allegedly promised to lower their monthly mortgage payments substantially in exchange for up-front fees of $1,495 to $4,495. The company allegedly gave the impression they were associated with the federal government, falsely claimed that most of their customers got mortgage modifications, and assured homeowners they’d almost certainly get modifications that would reduce their monthly payments. But in general, alleged the FTC, the hundreds of consumers who paid American Mortgage those fees never got a loan modification – or a refund of the fee they paid.
The FTC enforces the Mortgage Assistance Relief Services (MARS) Rule, which makes it illegal for companies to collect a dime - let alone thousands of dollars - until they’ve given their customers some key information: namely, a written offer from their lender or servicer that the customer decides is acceptable and a document from the lender or servicer that describes the key changes to the mortgage that would result if the customer accepts the offer. Oh yes, the companies also must remind the customers of their right to reject the offer without having to pay any fees at all.
If you're having trouble paying your mortgage or have gotten a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule. Legitimate resources are available to help you save your home, including housing counselors who can talk knowledgeably about a variety of foreclosure prevention options like reinstatement and forbearance.
Please let us know if you paid a fee in advance to a company that claimed it would modify your mortgage but didn’t come through. Your reports help law enforcement find and stop the scammers.