An official website of the United States Government

Mortgages

Consumer advisory: Don’t fall for a foreclosure relief scam or bogus legal help

By

Along with other cases from federal and state partners, today we charged that mortgage rescue scammers have taken $25 million in illegal advance fees from consumers. It serves as a reminder of how important it is to watch out for scam artists trying to take advantage of people who need help avoiding foreclosure.

Federal law bans law firms—except under very limited circumstances—from requesting or receiving payment from you for help obtaining foreclosure relief, such as a mortgage modification, before you’ve signed a mortgage modification agreement with your lender.

In one case, we allege that two companies and their principals offering legal services took in over $19.2 million in fees from over 10,000 distressed homeowners nationwide, with most, if not all, of that money coming from illegal advance fees for so-called loan modification services.

Warning signs

There are red flags that a company claiming to offer legal foreclosure relief help may not be worth your money. Watch for the following warning signs and ask more questions:

  1. Demands for payment upfront. If a lawyer or someone claiming to offer legal help wants to be paid first—before you receive a modification—they may be breaking the law. A licensed lawyer can ask you to pay first but only if the lawyer is licensed in the state where you live or where your house is located. Even a licensed lawyer in your state can only receive up-front payments if they meet other requirements about what they charge for, how they deposit the money, and if they comply with all other state laws and regulations.
  2. Any claim that a modification is guaranteed.Your mortgage company must agree before you can get a modification. A lawyer or someone claiming to offer legal help cannot guarantee you will get a loan modification.
  3. A hard sell. Most licensed lawyers do not call or e-mail you directly and push you hard to pay money right away. If someone claiming to be a lawyer calls you on the phone and asks you to sign papers or pay them right away, ask some more questions to be sure it’s not a scam. Here’s a guide to help you determine if it’s real legal help or a foreclosure scam.

Third party authorization

When it comes to actually getting help with foreclosure relief, your mortgage company may require you to authorize a third party to act on your behalf, so it’s important to know what this means for you. Only authorize a third party that is trustworthy and be careful about exactly what you’re authorizing them to do.

What servicers can do

Foreclosure relief scams are costly for consumers and also impact servicers and investors in the mortgage industry. We’re posting a new model third party authorization form that was developed as part of loan modification scam prevention efforts by representatives from government agencies as well as consumer advocacy groups, housing counselors, and the mortgage industry. The form may be useful for mortgage servicers who can choose to use the form in whole, or in part, by adapting other existing forms. The new model form provides additional questions that will help mortgage servicers build on existing privacy and fraud controls by collecting information that will make it easier for servicers to spot red flags of a foreclosure rescue scam.

We’re training housing counselors on the new mortgage servicing rules

By

This year, we established new, strong protections for homeowners facing foreclosure. Since these rules went into effect on January 10, we’ve been focused on helping housing counselors better understand these new federal protections available to struggling mortgage borrowers.

Since last December, we’ve provided on-site and virtual trainings to more than 5,000 housing counselors in more than twenty cities, including Columbus, Orlando, Los Angeles, Las Vegas, Phoenix, and Albany. We also recently held a training entirely in Spanish for Puerto Rico’s housing counseling community.

Find a housing counselor

There are more than 2,000 housing counseling agencies throughout the country, and we can help you find a HUD-certified housing counselor near you. They can help answer questions or address concerns about buying a home, renting, defaults, foreclosures, and credit issues.

Doing even more for housing counselors

If you’re a HUD-certified housing counselor and would like to request training on the new mortgage servicing rules, send us an email.

We also have a guide for housing counselors about the mortgage servicing rules. This is designed to be a quick reference for housing counselors and their work with clients.

Housing counselors can submit a complaint about consumer financial products or services, such as mortgages, online or by phone at (855) 411-2372, on behalf of clients. They can also use the public Consumer Complaint Database to monitor trends in their local marketplace.

Claim forms for the Ocwen settlement available now

By

Last year, along with authorities from 49 states and the District of Columbia, we filed an order requiring Ocwen Financial Corporation and Ocwen Loan Servicing to provide $125 million to foreclosure victims.

The National Ocwen Settlement Administrator is responsible for handling settlement claims and has created a website with information for consumers who were harmed by Ocwen’s actions.

Submit your claim online or by mail

The National Ocwen Settlement Administrator has contacted foreclosed borrowers and mailed notice packages last week. Once the materials arrive, you can submit your claim online. You’ll need your personalized claimant ID number (located on the form you receive in the mail) to complete your submission. Be sure to submit the online claim form by September 15, 2014.

If you choose to submit your claim form by mail, follow the instructions in the materials you receive in the mail from the National Ocwen Settlement Administrator. Claim forms submitted by mail must be postmarked by September 15, 2014.

You won’t receive a settlement if you don’t file your claim. All eligible borrowers who submit valid claims will receive an equal share of the $125 million. If you receive payments, you will not have to release any claims and will be free to seek additional relief in the courts.

Filing a claim is free

Watch out for scammers claiming that they will help you with your claim. When large numbers of consumers get refunds, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Call us at (855) 411-2372.

Still have questions?

If you have questions about your claim, eligibility, or the settlement, check out the commonly asked questions or call the National Ocwen Settlement Administrator at (866) 783-5382, Monday through Friday, 7 a.m. – 7 p.m. CT.

Spring 2014 rulemaking agenda

By

Today, we’re posting a semi-annual update of our rulemaking agenda in conjunction with a broader initiative led by the Office of Management and Budget (OMB) to publish a Unified Agenda of Regulatory and Deregulatory Actions across the federal government. Portions of the Unified Agenda are published in the Federal Register, and the full set of materials is also available.

Under the Regulatory Flexibility Act, federal agencies are required to publish regulatory agendas twice a year. We’ve been doing this for a couple of years now by voluntarily participating in the Unified Agenda. Our regulatory agenda includes rulemaking actions in the following stages: pre-rule, proposed rule, final rule, long term actions, and completed actions.

Mortgages

Our agenda includes a number of rulemakings mandated by the Dodd-Frank Act. For example, we recently convened a small business review (SBREFA) panel to discuss potential amendments to the Home Mortgage Disclosure Act, some of which were mandated by Section 1094 of the Dodd-Frank Act. We’re also focusing intensely on supporting the implementation process for our recent rulemaking to implement a Dodd-Frank Act directive to consolidate and streamline federal mortgage disclosures required under the Truth in Lending Act and Real Estate Settlement Procedures Act. We’re also continuing work with stakeholders to address questions that have arisen with regard to the 2013 mortgage rules, including issuing additional clarifications and amendments as warranted.

Defining larger participants

We’re also continuing rulemakings to implement our supervisory program for certain nonbank entities by defining “larger participants” in various markets for consumer financial products and services. For example, we’re developing a proposal to identify “larger participants” in the market for auto lending. We’ve previously defined larger participants in the consumer debt collection, credit reporting, and student loan servicing markets and are now in the process of finalizing a rule defining larger participants in the international money transfer market.

Debt collection

We’ve been doing research and outreach to assess issues in various other markets for consumer financial products and services over many months. In November 2013, we issued an advance notice of proposed rulemaking seeking comment, data, and information from the public about debt collection, which is the single biggest source of complaints to the federal government. We received more than 23,000 comments in response to the notice, and in our 2014 annual report on Fair Debt Collection Practices Act, reported that we received more than 30,000 consumer complaints in this area.

Payday loans and prepaid cards

We’re researching and considering whether rulemaking is warranted in the areas of payday and deposit advance products, as well as consumer overdraft products. We held a field hearing in March 2014 in Nashville, Tennessee, and also released a report that analyzed payday lending and found that four out of five payday loans are rolled over or renewed within 14 days. We’re also expecting to build on an Advance Notice of Proposed Rulemaking that we published in 2012 concerning prepaid cards by issuing a proposed rule to strengthen federal consumer protections for these products. We’ve been testing potential disclosures that we may propose to be used on the packaging of prepaid cards.

Privacy disclosures

We’re returning to a topic that had been raised as part of an earlier initiative to seek comment on ways to streamline and modernize regulations that we had inherited from other agencies. Specifically, we are expecting to issue a proposal regarding the notices that consumers receive each year from their financial institutions to explain the companies’ information sharing practices. A number of commenters had suggested that eliminating the annual privacy notices where there has been no change in policies would reduce unwanted paperwork for consumers and unnecessary regulatory burdens, at least where a financial institution limits the sharing of information with third parties.

We’re continuing research, analysis, and outreach on a number of other consumer financial services markets, and will update our next semi-annual agenda to reflect the results of further prioritization and planning.

Truth in Lending rule now available in easier-to-navigate format

By

The public, industry, and the government all benefit from regulations that are easier to find, read, and understand. That is why last year we launched our eRegulations tool which combines important information that can often be difficult to navigate or is spread throughout a regulation, often separated by dozens or even hundreds of pages. Ideally, using eRegulations will lead to better compliance and improved accessibility.

Now, as part of the eRegulations tool, we’re launching an intuitive, easier-to-navigate electronic format of Regulation Z, which implements the Truth in Lending Act. Regulation Z is the flagship federal regulation protecting consumers when it comes to credit products. Regulation Z can be complex to understand for people who have not specialized in it. And it has changed a lot recently with the addition of new rights and disclosures for mortgages.

By adding Regulation Z, one of the most complex and heavily-consulted consumer financial regulations, we can help mortgage stakeholders better understand and comply with the recent amendments implementing the Ability to Repay rules, the new federal mortgage integrated disclosures, and other changes. Stakeholders who deal with credit cards, auto loans, student loans, and other consumer credit will also benefit, because Regulation Z covers virtually all forms of consumer credit.

In order to help stakeholders navigate changes to the regulation, eRegulations displays the currently effective version of Regulation Z, previous versions beginning December 30, 2011, and any planned versions that are not yet effective (but are published in the Federal Register). In addition, a new feature allows you to compare two versions of a regulation, and see the differences in your browser. For example, check out the differences in §1026.32 between 2011 and the current regulation.

eRegulations going forward

As we continue our work to make regulations easier to use, we need to hear from you about what works best and how this tool is valuable to you.

How can you help?

First, if you haven’t seen eRegulations, check it out.

Next, tell us what you think. Help us understand if the tool is more helpful to you than regulatory sources that you use today (and why) and what about this tool is most valuable or what could be better.

Finally, share it. Help us get the eRegulations tool into the hands of others who can use it and benefit from it. This tool is open source, so we’d love for other agencies, developers, or groups to use it and adapt it.

A note from our lawyers

Please note, eRegulations is not an official legal edition of the Code of Federal Regulations or the Federal Register, and it does not replace the official versions of those publications.