• 06
  • August
    2010

The economic downturn and the weak housing market have left many people on the verge of foreclosure and have caused many to seek the assistance of companies promising to help modify mortgages and protect homes. Unfortunately, many of these companies have been making promises they cannot keep and have left homeowners even worse off than they were before.

These companies often use deceptive sales pitches claiming that they can find ways of stopping foreclosure, modifying mortgages or even relieving a homeowner of the mortgage altogether. The services offered by these companies often fail to live up to the hype, but still require the homeowner to pay a large, upfront fee of several thousands of dollars.

In efforts to protect consumers against unscrupulous companies preying on distressed homeowners, the Federal Trade Commission (FTC), has brought a total of 29 cases against mortgage relief companies over the last few years. Just recently, the FTC banned eight companies and individuals from selling these types of services in the future. In addition to banning their operations in the industry, the FTC also fined them a total of $29.2 million, but since many of the companies have already folded, they had to suspend more than one-third of that fine.

Among those companies targeted by the FTC, include some that apparently have attempted to associate themselves with government programs in the hopes gaining credibility with consumers. Companies such as Hope Now Modifications and Hope Now Financial Services appear to have been attempting to invoke Hope Now, an organization of financial counselors and banking industry officials aimed at helping individuals avoid foreclosure. Other companies have also attempted to imply some relationship with the government or its Making Home Affordable program.

Other companies recently banned by the FTC include those going by the names Federal Loan Modification Law Center, Loss Mitigation Services Inc., and Direct Lender.

Related Resources:

FTC bans 8 marketers from selling mortgage relief (Associated Press)