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The US Trustee’s Office has indefinitely suspended its random audit program effective March 2013.  The random audit program was one of the fraud prevention measures added in the 2005 BAPCPA amendments to the US Bankruptcy Code.  (Wall Street Journal)  The audit program has also been a significant cause of stress and concern for many of my clients.
The purpose of the US Trustee audit program was to identify “material misstatements of fact” in consumer bankruptcy petitions.  The US Trustee’s Office never defined the term “material misstatement.”  In a typical audit, the debtor would receive a letter requesting a routine set of financial documents such as pay advices from the 180 days prior to filing, bank statements from the 90 days prior to filing, and the most recent tax return.  The documents would be sent to an auditor who would review them and cross check them against the petition.  In some cases, there would be a more in depth review.
I’m glad the program is gone – at least for now – because it didn’t produce any results and it only made life harder for people who were already going through a stressful experience.  Besides, the bankruptcy system already has a system in place for catching fraud: the panel trustees.  A chapter 7 trustee who handles hundreds of cases a year and who takes testimony from every single debtor is in a much better position to spot fraud than a random auditor.
For the moment, debtors can rest easy knowing that they won’t be subject to a random audit.  It doesn’t mean that debtors and their attorneys should be any less careful – because the trustees are still there – but at least they don’t have to worry about be subject to an extra layer of random stress.

You hear and see ads all over the place. “We will stop your foreclosure!” “9 out of 10 customers keep their homes!” “Modify your loan with us, guaranteed!” You might have even received personalized letters in the mail that make similar claims. If it sounds too good to be true, it probably is.
Scammers are all too eager to go after those who need help the most. Consumers want desperately to keep their homes, reduce their mortgage payments, and just be more financially stable. When companies offer them a light at the end of the tunnel, many are willing to travel down that path. Hopefully you will able to see through the false promises these companies make and avoid becoming another victim of their all-too-common scams.
Scam Warning Signs
Look for some of these telltale signs that you may be dealing with a scammer:

• Scammers often guarantee they can get the lender to modify your loan or stop foreclosure. No one but your lender can guarantee this—period. They may claim they have an outstanding relationship to work these things out. Do not believe them.
• If you hear a lot of incredible statistics, like 99% of customers get their loans modified, be highly skeptical. If they are shouting these kinds of “results” from the rooftops, run for the hills.
• No trustworthy company will tell you to avoid talking with your lender, attorney, or a counselor. You have to ask yourself, “Why would they not want me to speak with my lender or attorney?” They are up to no good, and they want to take your money.
• Fees are always a suspicious topic. First, know that a mortgage relief service provider may not legally charge you an advance fee, unless it is an attorney. (In which case, make sure the provider actually is an attorney. Many scammers falsely claim to be associated with a law firm!) If they are willing to violate the law, they are willing to steal your money. Second, do not pay for any services or any “initial fee” by wire transfer, or by sending cash or a cashier’s check. If you are dealing with a scammer, you will never see that money again.

Seeking Real Relief
It is unfortunate that so many are so willing to prey on distressed homeowners. Fortunately, there are a lot of resources offering legitimate help, and there are a lot of alternatives to foreclosure.
You may consider contacting HUD approved housing counseling agencies near you, or the Homeownership Preservation Foundation, which is a nonprofit organization that may be able to help you with loan modification and foreclosure prevention.
Of course, your servicer can discuss some of your options with you, including a possible loan modification, repayment plan, reinstatement, forbearance, short sale, or deed in lieu of foreclosure. Foreclosure is not in their best interest so they may work with you.
You may want to contact an attorney who can explain other alternatives, such as Chapter 7 or Chapter 13 bankruptcy. Also, an attorney can explain all of your options in a way that you can understand. An attorney can also help you determine which option is right for you, help you prepare for and execute your course of action, and explain any possible effects of each of your options.
If you are struggling with your mortgage, act quickly. The longer you wait, the fewer options you have.
See Related Blog Posts:
Alternatives to “Foreclosure Defense” Offer Better Results
Fannie Mae Loss Mitigation Options
The post Spotting Mortgage Relief Service Scams appeared first on AKB.

Medical debt continues to be one of the top reasons why bankruptcy is filed.  Yet, many debtors are unaware of how the filing process can help stop medical debt collections. Whether you’re facing a pending lawsuit for an outstanding balance, having wages or funds garnished from your account, need legal assistance in making affordable payments, [...]

The FTC has been busy cracking down on mortgage relief scams. Just this year, the FTC has obtained settlements from over 20 individuals and companies involved with scamming distressed homeowners.
Most recently, two individuals and seven companies settled FTC charges that they victimized over a thousand people through “mass joinder lawsuits” and “forensic loan audits.” These defendants allegedly violated the Mortgage Assistance Relief Services (MARS) Rule, which aims to curb deceptive and unfair practices related to such services.
Mass Joinder Lawsuit Scam
The FTC alleges that Sameer Lakhany, Brian Pacios, Precision Law Center, Inc., Precision Law Center LLC, National Legal Network, Inc., and Assurity Law Group, Inc. targeted consumers with a mass joinder scam. The defendants allegedly promised homeowners that they could stop their foreclosures or obtain some other mortgage relief if they joined together to sue their lenders. The defendants represented themselves as a law firm called Precision Law Center and charged between $6,000 and $10,000 in up-front fees. Unfortunately for the victims, every suit was dismissed soon after being filed.
Forensic Loan Audit Scam
Lakhany was also involved in a “forensic loan audit” scam, along with The Credit Shop, LLC, Titanium Realty, Inc., and Fidelity Legal Services LLC; but the defendants allegedly held themselves out as nonprofit organizations with the domain names “FreeFedLoanMod.org,” “HouseholdRelief.org,” and “MyHomeSupport.org.” The forensic loan audit scam sells consumers an auditing service, which supposedly finds lender violations in mortgage documents. In this case, the defendants generally charged nearly $800 up to nearly $1,600 for this service. According to the complaint, the defendants told consumers that lender violations would force lenders to favorably modify their loans and that violations are found at least 90 percent of the time. Allegedly, the audits may have never actually led to a single favorable loan modification for the victims.
Settlements
As part of the settlements, the defendants are required to surrender many assets and pay $4.75 million redress in total. All but Assurity Law Group, Inc. are banned from mortgage relief and debt relief services, through Assurity will be required to surrender $100,000 in funds and has been ordered to cease any deceptive practices.
Other FTC Settlements
In February, the Ryan Zimmerman, Consumer Advocates Group Experts, LLC, Paramount Asset Management Corporation, and Advocates for Consumer Affairs Expert, LLC settled with the FTC for allegedly preying on consumers using the forensic loan audit scam. The defendants charged nearly $2,000 or more for the audits, but they of course failed to make good on their false claims, allegedly. In addition to a receiving a $3.5 million judgment against them, the defendants have been banned from marketing relief services or products, as well as from making any misleading claims about any other type of product or service.
In January, eight defendants settled with the FTC over charges that they sold fake relief services to distressed Spanish-speaking homeowners over the phone. The defendants include David F. Preiner, Daniel Hungria, Freedom Companies Marketing, Inc., Freedom Companies Lending, Inc., Freedom Companies, Inc., Grupo Marketing Dominicana, Freedom Information Services, Inc., and Haiti Management, Inc. The defendants allegedly collected over $2 million from consumers over three years, but simply did not provide the services they falsely claimed they could provide. As part of the settlement, the defendants received a $2.39 million judgment, are banned from marketing relief products or services, and are prohibited from making misleading claims about anything they may advertise.
You Have Options
There are many options available to struggling homeowners. You can always speak with your servicer, a credit counselor, or an attorney about those options. Any company that offers its mortgage relief services and instructs you to avoid speaking with any of the above is breaking the law. Stop business with them immediately and contact an attorney who can help you with your situation.
See Related Blog Posts:
Fannie Mae Loss Mitigation Options
Be Aware of Common Debt Collection Scams
The post FTC Cracking Down on Mortgage Relief Scammers appeared first on AKB.