Mortgage “assistance relief” scam targeted those behind on mortgages

Originally published in clarionledger.com on 1/14/2014.

PDF: Mortgage relief scams

While the national rate of home foreclosures appears to be on the decline, giving hope to a weary market, it’s cold comfort for millions of homeowners who are still struggling to pay their mortgages in the face of stubborn unemployment and rising prices. An estimated 5.3 percent of mortgages end up in foreclosure in the Jackson metro area, according to a report released in December. That puts Jackson in 72nd place among 366 metro areas.

Many Mississippi homeowners have found themselves on the receiving end of telemarketers, who promise to help prevent foreclosure or lower their mortgage payments. Although there are some legitimate sources of help, there are also many scammers on the prowl. Tuesday, the Federal Trade Commission (FTC) announced a settlement requiring operators of an alleged foreclosure relief scam to pay about $3.6 million and surrender their assets. According to the FTC, the scheme operated under various names, including Prime Legal Plans.

“Using Reaching U Network, a sham non-profit front, and a maze of other companies, the scheme reeled in consumers with false promises that enrollment would save their homes from foreclosure or result in lower mortgage payments,” noted the FTC release.  “The FTC charged that the defendants promised consumers that they would prevent foreclosure or significantly lower their mortgage payments by conducting audits of consumers’ loans and providing access to full-service, expert legal representation to fight their lenders.”

According to court documents, operators of the scheme “allegedly told consumers that they would be assigned an expert mortgage foreclosure defense attorney in their state who would ‘halt the foreclosure process’ and save their homes.  But instead of helping consumers, the defendants charged them illegal advance fees ranging from $595 to $750 per month, while delivering little or no help and driving them deeper into debt.  In addition to alleging that the defendants deceived consumers, the FTC charged that the scheme violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief.  The FTC also asserted that the Defendants placed numerous calls to numbers listed on the national Do Not Call Registry.”

“Rather than make good on their promise to offer people relief from mortgage trouble, these schemers put their targets even further behind financially,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.  “They broke the law by taking money upfront and making false promises.”

Although this one is off the streets, there are likely many more scammers ready to take their place. To help you avoid becoming another victim, a good resource is the Mortgage Foreclosure Consortium, founded in part by Mississippi Attorney General Jim Hood. Some great information is also available from the FTC at http://www.consumer.ftc.gov/articles/0100-mortgage-relief-scams.

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