We live in MN and have a first mortgage $273,000 and a second mortgage $37,000. The value of our house is maybe $250,000. Our interest rate is 4.5%. Our real estate taxes are separate from our mortgage payment not rolled in.
We are talking to a debt arbitration company: The Jefferson Legal Group in CA and he is recommending that we write a hardship letter and try for getting approval for the Making Home Affordable program in an effort to reduce our interest to 2% and possibly reduce the 2nd. Can we trust this company and trust that debt arbitration will work for us? If we aren’t approved, will our pmts go back to what they are now or do we risk a foreclosure proceeding? We don’t want to lose our house. Are the fees the debt arbitrators charge around $4,000? Would you recommend any other options for our situation? Thank you for your assistance.
It does not appear the group you mentioned, The Jefferson Legal Group, is a law firm in your state. If they are not then you should be aware of the Mortgage Assistance Relief Services Rule (MARS). An attorney who is not licensed to practice law in your state would be subject to the MARS rules.
The MARS rule put forward by the Federal Trade Commission (FTC) says:
It’s illegal to charge upfront fees. You can’t collect money from a customer unless you deliver – and the customer agrees to – a written offer of mortgage relief from the customer’s lender or servicer.
You must clearly and prominently disclose certain information before you sign people up for your services. You must tell them upfront key information about your services, including: the total cost, that they can stop using your services at any time, that you’re not associated with the government or their lender, and that their lender may not agree to change the terms of their mortgage.
If you advise someone not to pay his or her mortgage, you must clearly and prominently disclose the negative consequences that could result. You must warn customers that failure to pay could result in the loss of their home or damage to their credit rating.
Don’t advise customers to stop communicating with their lender or servicer. Under the Rule, it’s illegal to tell people they shouldn’t communicate with their lender or servicer.
You must disclose key information to your customer if you forward an offer of mortgage relief from a lender or servicer. You must give your customer a written notice from the lender or servicer describing all material differences between the terms of the offer and the customer’s current loan. You also have to tell your customer that if the lender or servicer’s offer isn’t acceptable to them, they don’t have to pay your fee.
Don’t misrepresent your services. Under the Rule, it’s illegal to make claims that are false, misleading, or unsubstantiated. – Source
Fees can only be collected from a mortgage assistance company until they’ve meet these requirements:
1. You get an offer of mortgage relief from your customer’s lender or servicer. You must have persuaded your customer’s lender or servicer to reduce, modify, or otherwise change the terms of the customer’s mortgage loan;
2. You give your customer the written offer. You must provide your customer with a written agreement from the lender or servicer to reduce, modify, or otherwise change the terms of the customer’s mortgage loan; and
3. Your customer accepts the written offer. The customer’s acceptance must be in the form of an executed written agreement with the lender or servicer that incorporates the changes to the terms of his or her mortgage loan.
So you can decide if you want to use the firm you mentioned. You might want to try and find an attorney who is licensed in your state to be your legal representative.
Just as an interesting observation, the BBB listing for The Jefferson Legal Group is 10940 Wilshire Blvd STE 1600, Los Angeles, CA 90024-3910. That happens to be a virtual office space. In itself, that doesn’t mean anything but you might want to make sure you are comfortable with the company. Here are some commonsense things you can do yourself.
I would recommend that anyone considering using such a company should read the following free guides.
- The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line
- How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off