The Federal Trade Commission announced last week that all foreclosure rescue firms and loan modification companies currently operating in the United States are prohibited in collecting advance payments from clients. This is in response to the overwhelming reports of fraudulent activities in the loan modification industry. Many homeowners claim that there are experts who ran out after receiving up fronts from their desperate clients. This results to the increasing number of foreclosure activity in the country which adversely affects the whole U.S. economy.
Today, companies are barred from ever requiring payment to consumers. Payment will be made only after the homeowner has received a letter from his or her mortgage lender or servicer stating that they decided to accept the offer made by the expert. Unless you have received a letter from your lender or servicer, do not pay any form of fees to the firm. If in case they require payment, ask for a full disclosure of fees. If you have hired an attorney, fees should be deposited into your trust account. The FTC mandates all loan firms full transparency of payments and anyone who insists on requiring up fronts must present a clear description of fees otherwise; he or she can be reported to the Federal Trade Commission.
Jon Leibowitz, FTC chairman said that many so-called foreclosure relief firms have already taken so much money from desperate homeowners and the only way to stop the trend is to forbid them from asking upfront fees. Receiving a letter from your mortgage company is the only surest way to know that the expert you entrust your home with is doing their job.
To date, neither the Federal Trade Commission nor the Government Accountability Office has solid figures on how prevalent scams are in the country. However, the number of victims is increasing and fake loan modification companies are sprouting like mad mushrooms all across the state. The FTC and GAO are asking everyone to be vigilant and to discern the motive of their expert. Anyone who requires thousands of dollars for home rescue services and firms who refuse disclosures must be reported immediately.
Another rule that all companies must follow is that they cannot make predictions of success. Only your mortgage lender has ability to modify your loan thus; firms offering money back guarantee must never be trusted. Furthermore, report anyone who mandates to stop the communication with your mortgage lender because the FTC has also barred firms from doing it. Again, loan modification companies do not have the power to modify your loan, only your mortgage lender or servicer can.
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