The passage of the CARES Act last year assisted many homeowners who were experiencing financial hardship due to the pandemic. Guidelines were issued on federally backed mortgages, including Fannie Mae and Freddie Mac, as well as Veterans Affairs (VA) and Federal Housing Administration (FHA) mortgages, which halted foreclosures on single-family homes.
The VA and Fannie and Freddie Mac moratoriums expire on February 28, 2021 and the FHA moratorium expires on March 31, 2021.1 These moratoriums may be extended by the Congress, however, at some point mortgage holders will have to start making payments again and catching up on missed payments. For many this will be a problem. With the possible uptick in foreclosures in 2021 it is important for homeowners to understand home foreclosure rescue scams in order to avoid being a victim of this type of theft.
Criminals will advertise these bankruptcy foreclosure scams or mortgage rescue scams in local newspapers, on flyers posted in your local coffee shop, or they may even contact you directly from information they obtain in foreclosure notice listings.
If someone contacts you directly, calling themselves a mortgage consultant, or touting their services as a “foreclosure service” or “mortgage rescue service” or something similar, they are not legitimate. Help is available to you, but you should seek it.
Finding a bankruptcy lawyer is a sound first step because an attorney can help you look at all the options available to you and determine which is best in your situation. Housing counselors are also available to assist you in working with your home mortgage lender and their services are free. It’s important to find a counselor who is certified by the Housing Development Authority in your state or the U.S. Department of Housing and Urban Development.2
The Federal Deposit Insurance Corporation has issued a bulletin on these mortgage scams, including warning signs that you may be dealing with a mortgage foreclosure scam operator.4
The recommend being wary if the company:
- Demands a fee in advance. No legitimate organization that works with borrowers to avoid foreclosure will ever ask for money up front.
- Makes unsolicited offers or “lofty” advertisements, claiming they can help save your home.
- Recommends you break off contact with the lender and any counselor that you may have been working with.
- Advises you to stop making mortgage payments.
- Tells you to send your mortgage payment to anyone other than your loan servicer.
- Instructs you to transfer ownership of your property.
- Makes verbal promises that aren’t put in writing.
- Asks you to sign a document that has blank lines or spaces.
The Making Home Affordable website, a program of the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development offers the following tips to avoid being a victim of a mortgage scam:
- Beware of anyone or any company offering you a HAMP modification after December 31, 2017. The HAMP Program is now closed. Scammers have been calling, e-mailing and contacting individuals claiming they have been approved for a HAMP modification and requesting payments be sent directly to them.
- Beware of anyone seeking to charge you in advance for mortgage modification services. In most cases, charging fees in advance of a mortgage modification is illegal.
- Only your mortgage company has the discretion to grant a loan modification. Therefore, no third party can guarantee or pre-approve your mortgage modification application.
- Beware of individuals and companies using mail and/or phone solicitations that claim to be from your mortgage company, but insist that payments be sent to an alternate contact or address that is different from the information in your mortgage statement.
- Paying a third party to assist with your application may not improve your likelihood of receiving a mortgage modification. Beware of individuals or companies that ask you for payment, tout their success rate. In particular, avoid any business that 1) pressure you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand; 2) offer to buy your house for cash for much lower than the selling price of similar houses in your neighborhood.
- Beware of individuals or companies that offer money-back guarantees or insist on upfront fees and can only accept payment by cashier’s check or wire transfer.
- Beware of individuals or companies that advise you to stop making your mortgage payments or discontinue contact with your mortgage company.
- Do not sign over the deed to your property to any individual or organization unless you are working directly with your mortgage company to forgive your debt.
Taking Action and Control of Your Finances
Dealing with financial issues is always stressful. Working with a bankruptcy attorney can reduce that stress as the bankruptcy lawyer will serve as an advocate for you and provide sound advice on how to best resolve your situation. Don’t fall victim to mortgage rescue scammers who can not only take your money, but in some cases, actually cause you to lose your home. Get professional help from reputable sources as early as possible when you are facing financial difficulty.
Hines Law Offices in Massachusetts has over 20 years’ experience in bankruptcy, foreclosure defense and debt relief solutions. We specialize in Chapter 7 and Chapter 13 filings and help clients rebuild their future.
If you have been affected financially due to the Pandemic, you have options. Personal bankruptcy may be one of them. If you have questions about your debt and how to stop foreclosure, our bankruptcy attorneys are here to help. Call today for a Free consultation.