Should I trust the offer received from a loan modification company? According to the Better Business Bureau, mortgage modification scams made the list of "Top Ten Scams of 2011."  Fraudsters are targeting distressed homeowners with all kinds of proposals & solutions that are very convincing.  Instead of actually helping the homeowner, they will leave the homeowner in total ruins or a lot worst off than when they started. 

In December 2010, The Federal Trade Commission (FTC) issued its final rule of The Mortgage Assistance Relief Services Rule, which bars companies & others (except attorneys) from charging upfront fees for mortgage relief or mortgage modification.  The FTC rules states the following:

1.      It's illegal to charge upfront fees. You can't collect money from a customer unless you deliver - and the customer agrees to - a written offer of mortgage relief from the customer's lender or servicer.

   2.      You must clearly and prominently disclose certain information before you sign people up for your services. You must tell them upfront key information about your services, including:

o   the total cost,

o   that they can stop using your services at any time,

o   that you're not associated with the government or their lender, and

o   that their lender may not agree to change the terms of their mortgage.

Even after this consumer protection rule became effective, homeowners are still falling prey to a number of schemes from unscrupulous companies or so-called investors.    Some  make false claims that they can help stop foreclosures, offer you a bailout while others want you to sign over your home.   Be extra careful.  If you are unsure of an offer, contact a HUD approved agency for assistance or have a real estate attorney or a Realtor that specializes in distressed homeowners to review it.  Never sign over your home or any blank forms or pay any upfront fee for assistance.