The Better Business Bureau received an inquiry this week from a Louisville, KY consumer who wants information about a home loan modification consultant (or mortgage foreclosure consultant). Here is what the consumer wrote in an e-mail to the Better Business Bureau:
"This outfit was suggested to me by my lender. I called the number and a representative met with me with some information papers and items I needed to apply. Really did not seem legitimate. There was no official letterhead and no one named who was responsible for the program. Just would like to have more information."
The BBB is gathering information on the specific company inquired about. Meanwhile, we can offer general advice that should be helpful.
While the Better Business Bureau would generally consider it a positive sign that this consultant was "suggested to me by my lender," the remainder of the message raises several "red flags." The consumer is wise to be cautious.
The U. S. Department of Housing and Urban Development website, www.hud.gov, may be the best place to start for homeowners seeking a loan modification or wanting help from a mortgage foreclosure consultant. This website, under the buttons for "Foreclosure Assistance" or "Talk to a Housing Counselor," can put you in touch with a list of HUD Approved Housing Counseling Agencies. This list of trustworthy agencies and organizations -- including organizations such as the Louisville Urban League, the Housing Partnership, Inc., the Legal Aid Society, the Kentucky Housing Corporation and numerous others -- will provide the information and advice you need.
The mortgage foreclosure/loan modification consultant the consumer inquired about is not on this HUD Approved list. This doesn't mean that the company or organization is not legitimate, but the consumer is at high risk of encountering a scammer or predator who is more interested in profiting from the misfortune of homeowners in financial difficulty than in helping these homeowners find the best path forward.
The Better Business Bureau encourages consumers to watch for these "red flags" when dealing with a mortgage foreclosure or loan modification consultant:
- The consultant requests payment before doing any work
- The consultant tells you to stop communicating with your lender
- The consultant wants you to sign a wage assignment, a lien on property, or a security agreement to secure payment of compensation to the consultant
- The consultant contacts you first, rather than you contacting the consultant.
- The fee sounds too high for the work to be done.
The Federal Trade Commission warns that a "foreclosure prevention specialist" may be "a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster."
If you are facing foreclosure or are behind on mortgage payments, you can find helpful information and advice using the links below: