The CFPB is going after companies and individuals who are seeking to take advantage of distressed homeowners. Specifically, they’re targeting those who coerce or trick owners into paying up-front fees in exchange for promises of future debt relief in the form of loan modifications.
These predatory practices are nothing new. Certainly since the beginning of the Great Recession, if not before, clever, greedy predators have been pressuring frightened and desperate homeowners, fearful of losing their houses, into paying them to “represent” them during a loan modification process with their lenders. However, Federal law prohibits firms from requesting payments prior to the signing of a modification agreement with the owner’s lender. Unfortunately, many owners are unaware of the rules, and have minimal understanding of the legal processes involved in the foreclosure process or the relief options that may be available. Scam artists are collecting advance payments from unsuspecting owners, and then absconding with the funds, often with an accompanying “Oh well, we tried. Sorry.”
Along with prosecuting offenders, the CFPB has released a guide to help homeowners determine the differences between predators and legitimate counsel.
Read more about this on the CFPB website