As the foreclosure crisis presses forward, the number of companies offering so-called "foreclosure relief" and "foreclosure rescue" services has increased significantly. But to the chagrin of most homeowners trying to avoid foreclosure, theses services offer very little help but charge excessive fees.
Here's what you need to know:
- You don't need foreclosure relief companies to do what you can do for yourself. Most of these companies are simply filling out paperwork for the Making Home Affordable program and submitting it to get homeowners a lower monthly mortgage payment. But this is something that a homeowner can do themselves or they can work with a non-profit housing counselor to get the same results for a lower fee.
- Speaking of fees, these foreclosure relief companies often charge $1200 or more to homeowners who have very little income to begin with. And not only that, the amount by which they reduce the homeowner's mortgage can be anywhere from zero to only a few dollars a month. Certainly not worth the upfront costs the homeowner pays.
- Many of these foreclosure relief companies are involved in deceptive practices. While most will have the homeowners sign a contract that says they understand that they are not guaranteed results, the salespeople for these companies will simultaneously emphasize the supposed success they've had with other homeowners fighting foreclosure.
Homeowners who want to stop foreclosure because they cannot afford a high monthly mortgage payment should first figure out what they can afford. Is it realistic to expect your monthly mortgage payment to drop 40 percent or 50 percent a month after a mortgage modification? Probably not. If a foreclosure relief company is offering those types of results then they are probably scammers.