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Federal and State Agencies Respond to Growing Threat of Mortgage Loan Modification Scams

May 5, 2009

The Federal Trade Commission, the federal watchdog responsible for enforcing consumers' rights, announced April 6 that it would coordinate with federal and state authorities to crack down on scam artists who prey on desperate homeowners with "foreclosure rescue" or "foreclosure prevention" schemes. In particular, the FTC said it was seeking to stop scammers who mislead customers into thinking they are affiliated with the federal government, claim near-perfect success rates, then take large up-front fees and disappear. In addition to taking legal action, the press release said, the agency is also reaching out to educate homeowners who may be victimized.

According to the release, a dishonest foreclosure prevention company typically recruits homeowners who are at risk of defaulting on their mortgages, actually in default or facing foreclosure. They advertise an unrealistically high success rate, the FTC said, then charge several thousand dollars and do little or nothing to help. Legitimate organizations will never charge those up-front fees, the release said. Worst of all, it said, many use names or Web addresses intended to sound like the names of government agencies, or organizations related to the government, such as: • Federal Loan Modification Law Center (FedMod) • • Hope Now Modifications LLC and New Hope Modifications LLC • Home Assure/Expert Foreclosure

The FTC has recently sought or won temporary restraining orders against all of these companies, and issued warning letters to 71 more. Through certain lenders and nonprofits, it is distributing materials to borrowers intended to keep them from being taken in.

As Santa Ana loan modification lawyers, we are delighted to see that federal and state regulators take this threat seriously. Foreclosure prevention scams take advantage of people who are already financially strapped and vulnerable, robbing them of money they could use to make a mortgage payment or get meaningful help. Frequently, the victims don't realize they've been exploited until it's too late or nearly too late to stop foreclosure. And unfortunately, they have proliferated in Orange County; the OC Business Journal reported April 17 that foreclosure prevention and loan workout companies were responsible for a spike in office space demand in March.

If you need help getting your lender to agree to a loan modification, Howard Law LLP can help. We are not a fly-by-night company with vague "mortgage industry experience"; we are an established law firm with legal accountability to our clients. Because we are Orange County loan modification attorneys, we understand your rights and the bank's legal obligations to you. And because we are lawyers, banks know that we can and will sue them if we find any violations of your rights -- which we can use as leverage to get you a loan workout that works. To set up a free, confidential consultation on a Fountain Valley loan modification today, please contact us online or call us toll-free at 1-800-872-5925.