For Immediate Release – June 29, 2009 - Homeowners who are delinquent on mortgage payments or facing foreclosure are vulnerable to deceptive loan modification services that charge hefty advanced fees for empty promises. These services are easily found on the internet and often solicit unsuspecting delinquent mortgage holders with offers to “save” their homes.
An Ashtabula man, who was in danger of losing his job and feared he would not be able to make his mortgage payments, was referred by a relative to 21st Century Legal Services (21st Century), a California company, for help. According to the complaint he filed with the Better Business Bureau, 21st Century promised him a 3% - 4% interest rate that the company’s attorneys would negotiate with his mortgage company. He was told the process would take only three months and he would get a full refund of the $2,000 advanced fee if the process was not successful. “Over four months later, they have done nothing for me but cash my checks!” he said. The homeowner’s relative who initially referred him to 21st Century and another family member had similar experiences with the company. The company did not respond to the BBB concerning the complaint.
A Euclid woman contacted Federal Loan Modification Law Center (FedMod) after hearing an advertisement on a local radio station. The California company promised to get her mortgage payments reduced for a $1,495 fee. She provided her checking account information for payment debiting. FedMod soon debited the first $500 payment. After she received no communication about her loan status and was repeatedly not able to reach anyone by phone, she closed her checking account to prevent future debiting and filed a complaint with the BBB. FedMod never responded.
21st Century and FedMod have “F” ratings with the BBB. 21st Century was sued by the Ohio Attorney General last week. The company is charged with violations of Ohio's Consumer Sales Practices Act and Debt Adjusters Act. According to the lawsuit, the company instructed consumers to stop making payments on their home loans and to stop contacting their lenders. Consumers were instructed to make out several post-dated checks, each approximately equal to their monthly mortgage payment, and believed 21st Century would take care of the rest.
FedMod was sued in April, 2009, by the Federal Trade Commission (FTC) for their business practices. In radio advertisements, the FTC alleges, FedMod induces homeowners to call its toll-free number by misrepresenting that it is part of or affiliated with the federal government, although it is not. According to the FTC complaint, FedMod often fails to answer or return consumers’ calls or provide updates about the status of their loan modifications, and assures consumers that negotiations with their lenders are proceeding when, in fact, little or no effort has been made to contact the lender.
If you need help, the BBB offers these tips:
ü Talk to your lender or mortgage servicer first to discuss loan modification options.
ü Contact a Hud-approved housing counselor. You can find a listing of local counselors at www.hud.gov.
ü Call First Call for Help at 211 or 216-436-2000 for referrals to agencies that can provide assistance. You can also contact the Cuyahoga County Foreclosure Prevention Program at 216.443.8182.
ü Beware of any loan modification service that requires you to pay money up front or encourages you to stop making mortgage payments. Also be leery of any company that tells you to avoid talking to your lender.
ü Avoid companies which imply they are connected to the government.
ü Check the company’s grade at www.cleveland.bbb.org or call the BBB at 216-241-7678.
ü Go to www.MakingHomeAffordable.gov to see if you qualify for refinancing or loan modification programs in place through the federal government. For immediate emergency assistance, call 1-888-995-HOPE (4673).