Better Business Bureau Warns of Mortgage Lawsuit Mailings

If you receive an official-looking letter from an out-of-state law firm asking you to fork over a hefty upfront fee to join a "mass joinder" lawsuit to force your mortgage lender to reduce your monthly payments, chances are good, you've been targeted by a new nationwide mortgage scam.

The Better Business Bureau and others are warning homeowners to beware of these solicitations, which represent the latest twist on a scheme - the advance fee mortgage scam - to con homeowners struggling to make their mortgage payments out of upfront payments of $5,000 or more.

Complaints from homeowners who paid thousands of dollars for mortgage assistance are a familiar story at the BBB. Few, if any, of these people got help. Many ended up worse off than before the so-called mortgage modification companies entered their lives.

The Federal Trade Commission recently issued rules banning the collection of upfront fees by mortgage-relief firms, a rule that exempts attorneys under certain conditions. And the California Department of Real Estate warned last month that some businesses were trying to take advantage of the lawyer exemption loophole to charge consumers advance fees for mortgage assistance suits.

The BBB offers the following tips for homeowners seeking mortgage assistance:
Call your bank or mortgage company before turning to a third party.
Beware of marketing companies, lawyers or other groups asking for fees to join a class action or "mass joinder" lawsuit against a mortgage holder. The chances of actually getting mortgage relief from such suits is slim at best.
Beware of any company that promises to help you modify your mortgage in return for an advance fee. As of January 31, 2011, this business practice is illegal, except under certain circumstances.
Beware of any company asking you to pay for a forensic loan audit. These audits may not help you reduce your loan rates or mortgage payments.
Before sending any money or signing a contract, check BBB Business Reviews at www.bbb.org or by calling (314) 645-3300.