SALT LAKE CITY -- Federal authorities are warning homeowners that a growing number of companies that offer foreclosure rescue plans for an upfront fee are failing to deliver on their promises.
Mortgage fraud specialists in the Salt Lake City office of the FBI and the Utah Department of Commerce issued a consumer alert on Wednesday to warn homeowners to beware of companies that claim to offer home loan modifications.
"You don't need them," said FBI Special Agent Michelle Pickens. "You have the option of calling your lender directly to discuss modifying your loan without paying those fees."
A modification can help homeowners lower their monthly mortgage payments if they qualify.
According to the Federal Trade Commission, foreclosure rescue firms often identify troubled homeowners through public records. The companies contact the individuals by sending letters and advertisements by mail. Some also place ads on the Internet, television, at bus stops, or post fliers in public places.
Many of the ads guarantee to stop a foreclosure and have been known to charge upfront costs as high as $2,000, Pickens said.
Recently, the FBI has received a steady number of complaints that these companies are not following through with promises to prevent a foreclosure or the firms are telling homeowners they didn't qualify for a loan modification after paying the fees.
Desperate homeowners, struggling to avoid foreclosure, are now falling victim to these schemes and often wind up in worse shape than before they paid the businesses for help, according to the FBI.
"People turning to these companies are making it tougher on themselves because two months down the road they're facing the same problem and they're two months deeper into foreclosure than they were before," Pickens said. "If they would have called their lender directly, they could have avoided that."
Lenders won't charge you upfront fees to modify a loan, Pickens said, but instead will provide the option to add the fee to the mortgage or pay it outright.
Homeowners who wish to file complaints about a foreclosure rescue scheme should contact both the Salt Lake City office of the FBI at http//:saltlakecity.fbi.gov/ and the Utah Division of Real Estate at www.realestate.utah.gov/complaint_form.pdf or by calling (801) 530-6747.
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