If you are involved in anyway with mortgage loan modifications keep in mind there are many organizations/government agencies looking to sue you and your company. Below is a class example I received earlier this morning. Most organizations use ‘testers’ who pose as a distressed homeowner seeking assistance.
Same applies to the renting of residential properties in Spokane and Washington State where these same ‘testers’ will call landlords (posing as a prospective tenant) who list their properties in Craigslist or the Spokesman to see if the landlord is compliant with the state and federal Fair Housing laws. These types of organizations always can find landlords who (almost always unknowingly) violate Fair Housing Laws which generates a demand letter from the organization (for cash) and remedial education. I have at least one case a month where I’m representing landlords who receive these demand letters. It becomes a very expensive lesson in Fair Housing Law.
Keep in mind that there are lots of organizations and governmental agencies who are trying hard to separate you from your hard earned cash.
Keep yourself educated and saavy.
Robert R. Rowley
Attorney at Law
Spokane
Distressed Home Owners Seeking Assistance in Obtaining Mortgage Modifications Face Rampant Non-Compliance with Federal and State Consumer Protection Laws
SPOKANE, WA – Northwest Fair Housing Alliance (NWFHA) has completed an investigation of mortgage assistance relief service (MARS) providers to determine their compliance with the federal MARS Rule (16 CFR 322) and the Mortgage Broker Practices Act of Washington (MBPA) (RCW 19.146). A total of 47 tests were conducted of 40 subjects of interest. These tests were conducted via telephone, with an additional analysis done of each service provider’s website. Subjects of interest were chosen both from lists of potential scammers provided by other agencies, and through internet research.
Of the 40 service providers tested, test results showed MARS Rule violations by 36 service providers (90%). Of these, 85% (34) MARS providers violated at least one MARS provision during their phone conversations with the testers, and 75% (30) had websites which violated at least one MARS provision.
The MARS Rule is a Federal Trade Commission rule that protects homeowners from mortgage foreclosure rescue and loan modification scams. Under this rule, companies that provide mortgage relief services may not collect any advance fees or make any false or misleading claims about their services. Further, such providers must make certain disclosures to protect consumers from being misled. There is an exemption under this rule for providers who are attorneys licensed in the state where the consumer or dwelling is located, provided they comply with all state laws and regulations governing attorney conduct related to the rule, and that they place any fees they collect in a client trust account.
The most common MARS Rule violations uncovered during NWFHA’s investigation were:
- Providers attempting to collect advance fees. 16 CFR 322.5. These fees ranged from $500 to $3,500, and some providers expressed a willingness to set up direct withdrawal installment plans.
- Making statements implying that distressed home loan borrowers should not make scheduled mortgage payments to the lender. 16 CFR 322.4(C). Some MARS providers told testers outright that they should discontinue their mortgage payments until they received a modification, while others implied that such a discontinuation would be necessary in order for the tester to save money to pay for the MARS.
- Misrepresenting the performance or characteristics of alternatives to for-profit MARS providers, including using any nonprofit housing counselor agency or program. 16 CFR 322.3(B)(9). For example, some of the MARS providers told testers that HUD approved housing counselors and state agencies are biased and will not advocate for consumers.
- Providers not making required disclosures to the testers. This includes failing to tell testers that they can stop doing business with the provider at any time, that if they decide to stop doing business with the provider they will not be charged, and that the provider is not associated with the government or the consumer’s lender. 16 CFR 322.4.
Non-attorney or out-of-state attorney providers apparently attempting to receive coverage under the MARS Rule’s attorney exemption, through promised or implied affiliation with WA State licensed attorneys, when the providers are not licensed to practice law in the State of Washington and promise to obtain WA counsel for the consumer only if needed for litigation. NWFHA filed enforcement actions with the appropriate governmental agency against the fourteen MARS providers which showed the most signification violations of MARS during this investigation. Further investigations in the future are expected to lead to additional enforcement actions.
The work that provided the basis for this audit was supported by funding under a grant with the U.S. Department of Housing and Urban Development. NWFHA is solely responsible for the accuracy of the statements and interpretations contained in this investigation and report. Such interpretations do not necessarily reflect the views of the Federal Government.
To learn more Northwest Fair Housing Alliance and its Eastern Washington Lending Awareness programs visit our website at http://www.lendingawareness.org.