Mortgage Relief Scams

Mortgage Relief

With so many uncertainties, so much legal jargon, and so many documents that require the eye of a licensed professional, navigating the complexities of the foreclosure or short-sale process can be daunting to many homeowners. That – coupled with the desperate nature of people hoping to avoid foreclosure – makes many homeowners prime target for real estate scams.

Fortunately, the Federal Trade Commission has stepped in to protect homeowners from mortgage relief scams. The FTC’s rule – called the Mortgage Assistance Relief Services rule (MARS) – aims to ensure that people who need counseling and advice during the mortgage renegotiation process do in fact benefit from any services for which they were charged. The rule also makes illegal any upfront fees and requires that certain disclosures are made to consumers if a short-sale is negotiated with a lender on their behalf.

The rule, which took effect on Jan. 31, is specifically directed toward the many companies who contact homeowners with loan modification services. But its impact will also be felt by real estate agents, who now have a slightly different set of rules by which to play when representing clients involved in a short-sale. A short-sale, wherein a homeowner and lender agree to avoid foreclosure and sell a property at a price lower than the amount owed, typically benefits a homeowner by sparing their credit report from a damaging foreclosure or bankruptcy black mark.

Realtors who claim to offer services or other expertise specific to the short-sale process must provide disclosures to consumers. A clear and prominent disclosure regarding their short-sale services must accompany any of their real estate advertising or commercial messaging. Later disclosures are also required before they can begin mortgage assistance services on their client’s behalf, and again when they present their client with the lender’s short-sale letter of approval.

Of course, if you’re a homeowner already struggling with the stress and uncertainties of losing your home, the disclosure statements might seem like nothing more than more jargon. More important to you should be knowing that it is illegal for any company – even one claiming it can help you – to charge upfront fees. If one does, hang up the phone or rip up the envelope. It’s likely someone trying to scam you.

Toucan Homes never charges up front fees as it helps homeowners through the short-sale process. Contact Justin Velthoen to see how Toucan Homes can help you. Justin is a real estate professional. The content presented above should not be considered tax or legal advice, and is intended only to assist homeowners in finding general answers to their questions. Toucan Homes recommends that homeowners seek professional tax and legal advice from a licensed lawyer and/or CPA.


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