The Maryland Department of Labor, Licensing and Regulation is warning consumers and mortgage companies to beware of a new type of business purporting to offer "loss mitigation consulting," "foreclosure prevention" and similar services.
Many of the businesses, which advertise through direct-mail solicitations and other marketing materials, are offering Maryland consumers help in negotiating resolutions of their delinquent mortgage loans with lenders and servicers in exchange for upfront fees.
The ads suggest that these businesses will help delinquent borrowers obtain payment plans, loan modifications, short sales and deeds in lieu of foreclosure.
While DLLR says it has been receiving consumer complaints about the fees paid to third parties that provide such services, the agency warns that mortgage brokers have also been targeted by these businesses in the hope of obtaining referrals.
Consumers should know, DLLR says, that no upfront fees may be collected under the Protection of Homeowners in Foreclosure Act. A foreclosure consultant may not claim, demand, charge, collect or receive any compensation until after they have fully performed each and every service that they were contracted to perform or represented that they would perform.
Foreclosure consultants also may not collect from a third party in connection with foreclosure consulting services provided to homeowners unless it was fully disclosed in writing to the homeowner, is clearly listed on any settlement documents and is not in violation of the act.
Consumers may file complaints with the DLLR at 888-784-0136.