When there’s distress, there’s fraud, scams and victims, especially in New York.
Distressed homeowners beware– no equity, no plan, no defense to scammers. The NYTimes reports about a new breed of scammer, one who takes your payments, fails to deal with the debt they promised to consolidate or “solve,” and stands idly by as the bank forecloses.
You see the commercial, hear the radio blasts– there are all sorts of companies out there touting themselves as “foreclosure rescue companies.” Typically, these companies charge an upfront fee to help you “modify loans,” but often do nothing to prevent foreclosure.
According to the article, the FTC (Federal Trade Commission) brought lawsuits last year against five companies representing 20,000 customers, and state and local prosecutors have brought dozens more to stop the unethical and improper upfront fee to help borrowers get lower rates on their mortgages from their lenders. Despite the fact that these borrowers often cannot afford the fees, the “debt reduction” services are often bogus and sometimes cause homeowners to lose their chance to renegotiate or to file for bankruptcy protection while the debt reduction company is not doing anything.
Bottom line– you had better investigate your debt reduction company, because many, though looking official, are simply scams waiting to rip you off, further harming your chances at correcting the problem.