Foreclosure frenzy

It’s bad enough to have your house heading for foreclosure, but to be swindled by a company offering to help avoid foreclosure? Really lame. The New York Times published an article on January 14, 2009, that reported the existence of some fraudulent companies that prey on financially troubled homeowners. These companies claim they will negotiate with lenders for lower interest rates on mortgages and charge an upfront fee, usually to the tune of $3,000, but the companies often just take the funds and never contact the lenders. The Federal Trade Commission in 2008 sued five such companies on behalf of some 20,000 victims.

To make matters even more confusing, there are legitimate rescue companies that actually do broker deals for lower interest rates. But, the industry is not well regulated, and it’s difficult to distinguish the legitimate companies from the crooks. So, be cautious and wary of companies that charge upfront fees or that guarantee results. Also steer clear of companies that advise you against contacting your lender. If you want to try to modify your mortgage, contact your lender or seek advice from nonprofit housing counselors.

This was posted on Friday, January 16th, 2009 and is filed in the Legal categories.