Educational Consumer Tips

Foreclosure Rescue Companies

Author: Better Business Bureau

You can save yourself a lot of time, money and anguish by avoiding any business that: 
-Guarantees to stop the foreclosure process – no matter what your circumstances
-Advises you not to contact your lender, lawyer or credit or housing counselor
-Collects a fee before providing any services
-Accepts payment only by cashier’s check or wire transfer
-Encourages you to lease your home so you can buy it back over time
-Tells you to make your mortgage payments directly to it, rather than to your lender
-Advises you to transfer your property deed or title to it
-Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
-Offers to fill out paperwork for you
-Pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

The Federal Trade Commission (FTC), the nation's consumer protection agency, has a Rule in place to protect homeowners. The Mortgage Assistance Relief Services (MARS) Rule makes it illegal for companies to collect any fees until a homeowner has actually received an offer of relief from his or her lender and accepted it. That means even if you agree to have a company help you, you don't have to pay until it gets you the result you want.

Know your Rights

The FTC's MARS Rule gives you rights – and sets out requirements for people who sell mortgage assistance relief services:You don't have to pay any money until the company delivers the results you want.It's illegal for a company to charge you a penny until:

1. it's given you a written offer for a loan modification or other relief from your lender; and
2. you accept the offer. The company also must give you a document from your lender showing the changes to your loan if you decide to accept your lender's offer. And the company must clearly tell you the total fee it will charge you for its services.

Companies must disclose key information.The Rule requires companies to spell out important information in their advertisements and telemarketing calls, including that:

-They're not associated with the government, and their services have not been approved by the government or your lender;
-Your lender may not agree to change your loan;
-If a company tells you to stop paying your mortgage, it also has to warn you that doing so could result in your losing your home and damaging your credit.Companies can't tell you to stop talking to your lender. You should always feel free to contact your lender directly to see whether they can offer you additional options.
-Companies that tell you otherwise are breaking the law.

If a company doesn't follow these rules, it could be trying to scam you.

Some lawyers may offer to help you get a loan modification or other mortgage relief. Under the MARS Rule, lawyers can require you to pay an upfront fee, but only if:

-They're licensed to practice law in the state where you live or your house is located;
-They're providing you with real legal services;They're complying with state ethics requirements for attorneys; and
-They place the money in a client trust account, withdraw fees only as they complete actual legal services, and notify you of each withdrawal.

Unfortunately, some people advertising mortgage assistance relief services falsely claim to be getting you help from lawyers. So before you hire someone who claims to be an attorney or claims to work with attorneys, do your homework:

Get the name of each attorney who'll be helping you, the state or states where the attorney is licensed, and the attorney's license number in each state. Your state has a licensing organization – or "bar" – that monitors attorney conduct. Call your state bar or check its website to see if an attorney you're thinking of hiring has gotten into trouble. The National Organization of Bar Counsel has links to your state bar.

Beware of attorneys who make bold promises or try to pressure you into hiring them

What to do before considering foreclosure rescue:

-Contact your lender or servicer immediately if you’re having trouble paying your mortgage or you have received a foreclosure notice. You may be able to negotiate a new repayment schedule. Lenders generally don’t want to foreclose; it costs them money.
-Contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates a national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help homeowners avoid foreclosure. HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. More information about HOPE NOW is at