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Mortgage Assistance Scams

Mortgage Assistance Scams

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Published by: dave1132 on Mar 14, 2011
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Mortgage Assistance Scams
Minnesota Attorney General’s Office
 1400 Bremer Tower 
 445 Minnesota Street
 St. Paul, MN 55101(651) 296-3353 
 TTY (651) 297-7206 
 TTY 1-800-366-4812
 www.ag.state.mn.usMinnesota homeowners are currently being targetedby companies offering mortgage assistance either inthe form of “foreclosure consultants” or “mortgagemodification companies.” Scam artists charge up-front fees and fail to deliver on promises to save ahome from foreclosure or to modify a borrower’sloan terms. No homeowner should pay fees up-frontfor mortgage assistance. There are non-profit orga-nizations that provide mortgage assistance for
as part of their mission.
AT THEFIRST SIGN OF TROUBLE IN PAYING YOURMORTGAGE.If you are a homeowner that has fallen behind on yourmortgage payments, you are not alone. Millions of Americans may face mortgage foreclosure over thenext few years. Predatory mortgage lending, explod-ing interest rates, and the worst economy since theGreat Depression have contributed to a mortgage cri-sis that threatens to destroy the American Dream of home ownership for people across the state. If youare faced with resetting mortgage rates, mortgage de-fault, or foreclosure, arm yourself with information,get the
right kind 
of help, and take decisive action toprotect your interests.
From the Office of Minnesota Attorney General Lori Swanson
There are three types of mortgage assistance scamsthat can waste homeowners money and precious time:1) Foreclosure Consultant Scams, 2) Mortgage Modi-fication Scams, and 3) Forensic Loan Audit Scams.
1. Foreclosure Consultant Scams.
ForeclosureConsultant Scams typically target a borrower whosemortgage is in default or who is already facing theforeclosure process. Some organizations or individu-als may represent themselves as counseling agenciesbut are actually only out to make a profit off the mis-fortune of others. Typically, these entities will ask for up-front fees in exchange for “counseling” ser-vices such as financial advice, negotiating paymentsor other solutions with the lender, or exploring thesale of the property. These are services that borrow-ers can do themselves and may be offered for
byreputable organizations. Scam artists that collect up-front fees may not actually provide any of the ser-vices promised or may even disappear overnight.
Under Minnesota law, a foreclosure consultant isprohibited from collecting a fee until after it hasprovided a service to you.
Don’t be scammed byMortgage Foreclosure Consulting Scams!
2. Mortgage Modification Scams.
A new breed of predatory practice, spun off from the foreclosure con-sultant scam, has emerged during the foreclosure cri-sis: the Mortgage Modification Scam. The Mort-gage Modification Scam typically targets homeownerswho may not yet be in mortgage default or foreclo-sure but who are concerned about resetting interestrates or worried about their ability to continue mak-ing their payments in a troubled economy.Homeowners seeking legitimate assistance are tar-geted by mortgage modification predators that makeempty promises to save their home, modify their mort-gage, or provide other mortgage assistance, usuallyin exchange for the payment of hefty up-front fees.Don’t pay these up-front fees!
Minnesota Attorney General’s Office
 1400 Bremer Tower 
 445 Minnesota Street
 St. Paul, MN 55101(651) 296-3353
 TTY (651) 297-7206 
 TTY 1-800-366-4812
3. Forensic Loan Auditors.
Forensic Loan Auditsare yet another mortgage assistance scam that has re-cently developed. Forensic Loan Auditors exploitrecent news stories of past predatory mortgage lend-ing practices to sell a “Forensic Loan Audit,” whichthe “auditor” claims will discover violations of stateand federal mortgage-lending laws in thehomeowner’s mortgage loan. The “auditor” furtherclaims that these legal violations will provide thehomeowner with “ammunition” that the homeownercan use against the lender to obtain a faster or morefavorable loan modification or to obtain other fore-closure relief. Like Foreclosure Consultants andMortgage Modification Scams, Forensic Loan Audi-tors typically ask homeowners to pay hefty up-frontfees for their services. In truth, there is no evidenceto support the claim that forensic loan audits willhelp homeowners obtain a loan modification or otherforeclosure relief, even if they are performed by anauditor, mortgage professional, or attorney. Don’tbe fooled by Forensic Loan Audits!Homeowners should also be wary of any company,whether it be a Foreclosure Consultant, MortgageModification Company, or Forensic Loan Auditor,that claims to be “attorney backed” or that uses attor-neys. These companies may tell homeowners thatthey are exempt from Minnesota’s law prohibitingup-front fees because they use attorneys and thathomeowners will receive better service because theyare working with attorneys. In reality, these compa-nies at best often use out-of-state lawyers who arenot authorized to practice law in Minnesota. Theseout-of-state lawyers typically require homeownersto sign retainer agreements that provide only mini-mal services and homeowners often pay thousandsof dollars and receive no results. Don’t let this hap-pen to you! Find the
right kind 
of help.
If you experience financial trouble that may jeopar-dize your mortgage payments, ask for help. Timelyaction can make the difference! The following agen-cies and organizations may be available to provideinformation, referrals, and assistance to homeownersregarding foreclosure issues:
U.S. Dept. of Housing and Urban Development
451 7th Street SWWashington, DC 20410(800) 569-4287 or TTY: (800) 877-8339www.hud.gov/foreclosure
Minnesota Housing Finance Agency
400 Sibley Street, Suite #300St. Paul, MN 55101(651) 296-7608 or (800) 657-3769www.mnhousing.gov
Minnesota Home Ownership Center
633 South Concord Street, Suite #250South St. Paul, MN 55075(651) 659-9336 or (866) 462-6466www.hocmn.org
Lutheran Social Services Financial Counseling
424 West Superior Street, Suite 600Duluth, MN 55802(888) 577-2227 or (218) 529-2227www.lssmn.org/debtContact your lender as soon as possible. Ask thelender what the options are. Don’t ignore the prob-lem or correspondence from the lender, as late charges(and other fees) can pile up, compounding the prob-lem. Be realistic about your financial situation. Sinceeach person’s situation is different, there may be arange of solutions. For instance, some borrowers mayfall behind temporarily due to a change in work sta-tus, health issues, or other short-term economicchanges. Other borrowers may have long-term prob-lems in their ability to pay a given mortgage becausethey could not afford the loan in the first place or area victim of exploding interest rates. If you’re behindin your payments, consider the following tips:
1. Find a reputable mortgage counselor.
Contactthe Minnesota Housing Finance Agency or U.S. De-partment of Housing and Urban Development(“HUD”) to find an approved counselor. A reputable

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