Distressed homeowners behind on payments and facing foreclosure often feel there is nowhere to turn for help. This is no doubt what led a number of consumers to place their trust in Colleagues
in Law (“CIL”) and their promises of mortgage relief. The Las Vegas headquartered business has issued promises of lower loan payments and significantly lower interest rates, as long as you provide up-front fees of a couple thousand dollars. For some homeowners
who paid these fees, the relief they sought was never provided. To make matters worse, not only were they out of the money paid to CIL, but they still faced the possibility of losing their homes.
In response to
complaints, CIL often refers to their agreement and claims they have fulfilled their contract. In the agreement, the company offers to review homeowners’ loans for errors and acts of misconduct and then prepare documents for consumers to file complaints.
The idea is that lenders will respond to complaints by offering to modify loans or negotiate other terms. Oftentimes this differs from what the consumer is initially told and sold when they contact CIL for assistance. Homeowners are looking for lower payments,
lower interest rates, or other modifications promised by representatives of CIL during the solicitation phase. However, if the company cannot obtain the relief represented, as long as they have conducted their review and aided in filing complaints, CIL appears
to believe their services have been rendered and no refund is warranted.
According to some responses by CIL, they file complaints with the Consumer Financial Protection Bureau, the U.S. Department of HUD, Congresspersons, lenders and loan servicers, all which can be done free of charge. It is difficult to understand why so much
money is requested to conduct the services or why it is required up-front. And while CIL believes their services are not governed by the Federal Trade Commission’s Mortgage Assistance Relief Services Rule (“MARS Rule”) that prohibits up-front fees, the offer,
representations, and services appear to be exactly what the rule covers.
The horror stories relayed by consumers who trusted so-called “relief firms” are disheartening. In many cases individuals that find themselves in desperate situations rely on promises of these companies, which just don’t pan out. After paying hundreds and
thousands of dollars for loan modifications, forensic audits, and other relief, the homeowners end up worse off, often losing their homes. Most of the unscrupulous firms disappear after collecting their fees, not answering or returning phone calls and emails.
Kim’s advice: Be diligent and do your research before paying any money or providing information to anyone boasting that they can save your home. Some basic things to remember when it comes to mortgage relief are:
- Never pay an up-front fee. Complainants who did business with CIL allege the company refused to start services without first collecting up-front fees, in some cases as much as $5,000. It’s illegal for companies that provide mortgage relief
services to charge you before they’ve given you a written offer from your lender and you’ve accepted the offer.
- A forensic loan audit won’t prevent foreclosure. Many companies offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The claim that you can use the audit report
to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan, is simply not true. There is no guarantee that the lender will modify your loan, even if you sue them based on errors in your loan documents.
- Thoroughly review your agreement and compare it with what you are told by the relief company. Before signing any agreement, carefully look over the terms and make sure you understand what services are being offered. If the contract is riddled
with legal jargon, it may be best to have an attorney review it. Ask for clarification if something isn’t clear or if you have any questions. Obtain all promises and guarantees in writing.
- Don’t stop making your mortgage payments. If you discontinue making mortgage payments, you could lose your home. If a company advises you to stop paying your mortgage, it should also warn you that doing so could result in the loss of your
home and damage to your credit rating.
- Don’t send your mortgage payment to anyone but your lender or loan service provider. Any company that asks you to send your mortgage payment to them while they negotiate on your behalf will almost certainly take your money and disappear.
If your lender doesn’t receive your mortgage payments, you could lose your home.
- Don’t do business with a company that guarantees to get you a modification. The decision to modify your loan rests with the lender. They may not agree to change your loan and any company offering you mortgage relief services should inform
you of this.
For more tips on how to avoid foreclosure, visit our BCA how-to guide on “How to Take Steps to Avoid Foreclosure”
About the Author:
Kim Burge is Business Consumer Alliance’s Vice President of Business Practice. For media inquiries, Kim can be reached by phone at (909) 835-6094.
About Business Consumer Alliance:
Business Consumer Alliance (BCA) is a non-profit which started in 1936. The broad purpose of BCA is to promote business self regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint
information along with other relevant information like customer reviews to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud
the marketplace. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.