How to Avoid Mortgage Repair and Rescue Scams

During the boom times, one of the biggest dangers for consumers were the shady mortgage companies that offered mortgages that were bad for homeowners but very good for the mortgage companies.

Scammers are targeting people having trouble paying their mortgages. Some claim to be able to “rescue” homeowners from foreclosures, while others promise loan modifications for a fee. If you get this kind of a pitch, watch out.

What does a scam look like?
Every scam is different, but most have some kind of of promise that sounds too good to be true, like the following:

“We can stop your foreclosure!”
“97% success rate!”
“Guaranteed to save your home!”

Scams often involve you paying an up front fee for a promise of saving you more money later. Don't believe it. Don’t pay any business, organization, or person who promises to prevent foreclosure or get you a new mortgage. Some might give you sweet sales pitch and after you pay up they stop returning your phone calls. Others may string you along before disclosing their charges. Bottom line, if they ask for a fee, walk away.

Deal with your mortgage servicer directly
Some scammers offer to handle financial arrangements for you, but then just pocket your payment. Send your mortgage payments ONLY to your mortgage servicer.

Don’t Pay for a Second Opinion
Have you applied for a loan modification and been turned down? Never pay for a second opinion. Instead, look for options that don't involve you paying someone to look for a solution for you

Make sure you deal only with official organizations
If you are looking for help or advice from a local, regional, or national government organization or nonprofit group. Make sure that you are dealing with a real one and not a fake. Some con artists use names, phone numbers, and website addresses to make it look like they’re part of the government or of a nonprofit. If you want to contact a government agency or a nonprofit, don't follow any links in an unexpected email or on a suspicious looking web site. Type the web address directly into your browser and double check any address you're not sure about. Use phone numbers listed on agency websites or in other reliable sources, like the Blue Pages in your phone directory. Don’t click on links or open any attachments in unexpected emails.

The federal government also wants to take these scam companies out. Check out this interview with the Federal Trade Commission from early February 2010.

Gift Card Rules Will Change, But Not That Much

Starting on August 22, 2010, rules on prepaid gift cards will change, but not all that much. The biggest changes are that they can't expire within five years of activation (unless the agreement explicitly says otherwise)

Inactivity fees will be limited, but not eliminated. You can't be charged any kind of inactivity fee or service charge unless there has been no activity for a 12-month period, or unless the fees or charges were disclosed up front (read the agreement carefully). If there are fees, there can be no more than one per month.

If it looks like a gift card, it may not be a gift card when it comes to these rule changes. These expiration rules don't apply on prepaid phone calls, reloadable cards, loyalty or award cards, cards issued for special events or venues like an amusement or theme park, or cards issued in paper only.

The bottom line is before you buy a gift card, or if you receive one for whatever reason, be sure to read the fine print to make sure that the card will work for you.

Under 21? - Getting a Credit Card Just Got Tougher

Last year, the US Congress passed a law that makes it a lot tougher to get a credit card if you are under 21. How tough is it? Starting February 22, 2010, several things will change:

• You will need income, assets, or a cosigner: You will have to show proof that you have the means to pay your credit card bill, such as income from a job or other assets. If not, you will need to have an adult cosigner on your credit card. That cosigner will be fully responsible for paying the bills of the card holder, so unless that person really loves you or trusts you, don't count on them being a cosigner.
  
  
• No more offers in the mail: Credit card companies will no longer be allowed to send prescreened credit card offers in the mail to anyone under 21.
  
  
• Fewer college giveaways: Companies marketing credit cards to college students can't give away free stuff on or near the college, or at college-sponsored events.

How bad is this for students and younger people? Mortgage311.org thinks it is a good thing for most younger people. Those that do have the income or the assets won't be affected, and those that don't should either be motivated to have an income or to create financial assets, or to manage life without credit cards.

Having a cosigner, typically a parent, for a young person should not be an issue if that young person is both financially responsible and has a parent who can provide financial support as well as guidance for the responsible use of credit.

The biggest losers are the credit card companies who will have much less of an opportunity to convince financially inexperienced young people with no money or job that having and using credit is a good thing.