CFPB and FTC Fight Foreclosure Relief Scammers

The Consumer Financial Protection Bureau, the Federal Trade Commission, and 15 states announced they are taking action against foreclosure relief scammers accused of using deceptive marketing tactics to take advantage of distressed homeowners.

The CFPB says it will file three lawsuits against companies and individuals that collected more than $25 million in illegal fees. They are said to have offered services that falsely promised to prevent foreclosures or renegotiate delinquent mortgages.

Some of the services include collecting fees before the consumer obtained a loan modification, and making consumers believe they would receive legal representation.

The CFPB is pushing for the victims to be compensated. In a separate action, the FTC says it is filing six lawsuits. The states plan to take 32 actions.

The CFPB says consumers should watch out for the following foreclosure relief red flags:

  • Demands for upfront payment. A licensed lawyer can ask you to pay first, but only if he or she is licensed in your state of residence or where your house is located.
  • Claims that your loan modification is guaranteed. Your mortgage company must agree before you can get a modification.
  • A “hard sell.” The CFPB warns that most licensed lawyers will not call or e-mail you directly and push you to pay right away.

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