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FTC Joins Local Jurisdictions to Fight Mortgage Relief Fraud

There's a familiar saying that goes something like this: If it sounds too good to be true, then it is too good to be true. Said another way, if it's too good to be true, it must be a scam.

Scams come in various forms. There are the solicitations promising to reduce your property taxes - if you pay a fee in advance - that arrive in envelopes that have that green, government-issued look to them.

Or the man that knocks on your door and promises to fix your car's fender at one-tenth the price that an auto body shop might charge you.

Then there are the promises lenders make as they convince that they can reduce your monthly mortgage payments and the interest rate on your loan, provided you pay their fees in advance. That might be the most sinister proposal of all.

These days, the Federal Trade Commission is cracking down on lenders taking advantage of homeowners in distressed situations. The FTC has taken action against six mortgage relief companies, sought orders stopping their illegal practices and freezing their assets pending litigation.

Federal and State Agencies Join Forces to Fight Mortgage Fraud

These actions are part of a joint federal and state enforcement sweep called Operation Mis-Modification being conducted with the Consumer Financial Protection Bureau and 15 state attorneys general.

Here are a few examples of the cases they are pursuing, including one in California.

The Danielson Law Group required advanced fees ranging from $500 to $3,900 and in return promised that their attorneys would negotiate loan modifications to reduce clients' mortgage payments. They advised clients to stop paying their mortgage and promised full refunds if clients weren't satisfied with their work. The Danielson Law Group took in more than $35 million from distressed homeowners. The FTC has halted operations of the company.

The FTC alleges that FMC Counseling Services, Inc. falsely advertised itself as affiliated with the federal government's Making Home Affordable assistance program. It also used the Federal Deposit Insurance Corporation's logo and promised consumers that it could quickly modify mortgages and even provide free mortgage financing. The company advised its clients to stop communicating with their lenders. FMC Counseling Services collected more than $600,000 in mortgage payments from its clients yet according to the FTC the company did nothing for its clients. As a result, many consumers lost their homes as well as the mortgage payments they made to the company.

The FTC alleges that from at least August 2010, Mortgage Relief Advocates, based in California, sold fraudulent mortgage assistance services on its websites and through telemarketing. They charged upfront fees up to $3,200 and according to consumers, rarely provided any mortgage relief services.

When someone uses high-pressure sales tactics, promises risk-free investments, promises spectacular profits, or guarantees it can provide mortgage relief if you pay exorbitant fees in advance, walk away and notify local authorities.

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