Another "Mortgage Relief Company" has been shut down for violating several State Consumer Protection Laws. On Monday, September 24th, 2012, the United States District Court for
the Southern District of Florida entered a
Temporary Restraining Order which prohibits Prime Legal Plans
LLC, together with its related entities, and the individuals who control
and/or work for Prime Legal Plans LLC from
contacting homeowners and seeking to or collecting any monies from
consumers for mortgage assistance relief related services. Based upon information provided by the Court Appointed Receiver, the Prime Entities offered to help people resolve mortgage foreclosure issues and charged consumers anywhere from $595 to $750 per month for their "services." Based in Florida, the company apparently solicited clients from around the country making unrealistic promises to save their homes from foreclosure. Unfortunately, the company took the money but did nothing to help their clients. Here is the link the the Receiver's website: www.primelegalreceivership.com.
This is one of many "Mortgage Relief Companies" which are currently operating in the present economic environment. They prey on people who are afraid of losing their home and make promises they can't possibly hope to fulfill. Many of my clients have received solicitations from this company and similar organizations. Because I was concerned about the reputation of these companies and the promises being made, I wrote a newsletter article concerning the Federal Trade
Commission's adoption of the Mortgage Assistant Relief
Services Rule (MARS). The rule was adopted to protect distressed homeowners from mortgage
relief service providers that claim, that for a fee, they will negotiate
with consumer’s mortgage lender or service to obtain a loan
modification, a short sale or other relief for the home owner, or
foreclosure. The changes are a
result of a flood of complaints by consumers that many of these
companies are bogus or have made false or misleading claims and
representations.
Under MARS Rule,
mortgage relief companies may not collect any fee until they have
provided consumers with a written offer from their lender or service
that the consumer deems acceptable. The written offer must describe the
key changes to the mortgage that would result if the consumer accepts
the offer. Mortgage relief companies also must remind consumers of their
right to reject the offer without any charge. Under the new rules
several disclosures are necessary, including:
- Mortgage relief companies must not state that they are associated with the government, and their services have not been approved by the government or the consumers’ lender.
- That the lender may not agree to change the consumer’s loan.
- If the mortgage relief companies tell consumers to stop paying their mortgage, they must tell them that they could lose their home and damage their credit rating.
- Mortgage relief companies also must explain in their communication and to consumers that the consumers may stop doing business with the mortgage relief company at any time.
Homeowners who are struggling with their mortgage should also be aware of how a Chapter
13 Bankruptcy might save the family home from foreclosure. Unlike promises made by mortgage relief companies such as Prime, the Bankruptcy Code provides a safe, predictable and cost effective method of saving the family home. One of the
more well known uses of a Chapter 13 is that the homeowners can stop
foreclosure and pay back all of the mortgage arrears over a period of
3-5 years. Another option that may be available to some consumers is the
possibility of “stripping off” totally unsecured second and third
mortgages. For instance, if a home is presently worth $100,000.00, is
subject to a first mortgage in the amount of $105,000.00, in addition to
a home equity line-of-credit (HELOC) of $20,000.00, the home owner
could propose a Plan inside Chapter 13 to “strip off” the HELOC and have
it treated as a totally dischargeable debt in bankruptcy.
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