Loan Modification: The Latest Scam

Florida’s Attorney General sues illegal mortgage modification company

Attorney General Bill McCollum filed a lawsuit against National Foreclosure Counseling Services, Corp. for charging up-front fees to customers seeking help modifying their mortgage. Florida legislators enacted the Foreclosure Rescue Fraud Prevention Act last October, forbidding any company from charging such a fee in Florida prior to services being rendered, other than by an attorney.

In response to the lawsuit, a judge has entered an order prohibiting NFCS, also known as American Foreclosure Counseling Center, from collecting any additional up-front money from clients.

Across the country, former mortgage brokers are now preying upon the same people they ripped off just a few years back. Back then, brokers were completing fraudulent loan applications and taking kickbacks (in the form of a yield spread premium) from lenders for charging home buyers higher interest rates than the rate for which they actually qualified.

Today, out-of-work brokers are now going back to these same people, promising they can renegotiate with the new owner of the home loan. Often, home owners pay an up-front fee of hundreds or even thousands of dollars, but in return, they often get nothing.

Keep in mind that, if you have been served with a foreclosure, you must respond to the complaint, regardless of whether you are working with your lender or not. Your lender will often use the “mortgage modification process” as a distraction to keep you from actively defending your foreclosure.

Any homeowner served with foreclosure papers should immediately seek the advice of a lawyer who focuses in the area of foreclosure defense. If you have been charged an up-front fee by National Foreclosure Counselling Services or any non-attorney "foreclosure rescue" firm, contact Florida’s fraud hotline at 1-866-966-7226.