For Immediate Release - April 29, 2011

Foreclosure and Debt Relief Companies Misleading Consumers, Charging Improper Fees According to a Recent Survey by the Office of Consumer Affairs

Companies charging up-front fees referred to Attorney General, Federal Trade Commission; Office launches statewide Public Service Announcement campaign

BOSTON - April 29, 2011 - A review of foreclosure and debt relief specialists by the Patrick-Murray Administration's Office of Consumer Affairs and Business Regulation found many provide consumers with misleading information or solicit payments in violation of state or federal law - including six of 13 foreclosure relief companies that seek upfront fees in violation of state regulations.


Those six companies are being referred to the Attorney General's Office by the Office of Consumer Affairs. Additionally, two debt relief companies found to charge up-front fees are being referred to the Federal Trade Commission by the Office, for violating federal laws.


The survey is part of the Office of Consumer Affairs' ongoing advertising monitoring project, which seeks to ensure that consumers are protected from false and misleading advertising. In an effort to ensure consumers are aware of the presence of predatory companies, the Office of Consumer Affairs is launching a radio public service announcement campaign with local radio stations throughout the state.


"By charging upfront fees with no guarantee of success, these companies can further harm a consumer's situation instead of improve it," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "Consumers need to be aware of the risks these companies pose, and we are referring our results to the Attorney General and Federal Trade Commission and asking for further investigation of these apparently illegal operating procedures."


The investigation included phone calls from Office staff posing as consumers in need of help and information, and focused on 27 companies that advertise on local radio and television, and appear near the top of online search results.


Last year, the Office of Consumer Affairs and the Division of Banks received approximately 3,000 calls from consumers with questions related to foreclosure relief, or complaints about credit, debt or foreclosure issues, including concerns over fees and legitimacy of the companies.


"Consumers who owe a lot of money and find it difficult to pay their bills can be vulnerable to misleading ads that promise quick, cheap or easy fixes. They end up with dashed dreams and more deeply in debt," said Paula Fleming, vice president of Communications and Marketing for your local Better Business Bureau. Visit to find out more details on this type of business.


Of the 13 foreclosure relief companies reviewed by the Office, staff made phone contact with eight companies. Six of those companies sought up-front fees before helping homeowners, ranging from $500 to $750. The Attorney General's Office has in place regulations that forbid the charging of up-front fees by foreclosure relief entities. The Office of Consumer Affairs is referring these companies to the Attorney General, because it has reason to believe those companies charge up-front fees:, Massachusetts Loan Mod Center, Mass. Home Relief, Creative Loan Modification, National Mortgage Help Center, and US Mortgage Relief.


Four of the eight companies contacted also made promises to stop foreclosure, reduce monthly payments, and reduce the mortgage interest rate. "We'll get you out of foreclosure and drop the interest rate," one firm said. Another simply said, "We can stop the foreclosure, of course we can." Another said it would fight the foreclosure in court because Massachusetts requires a judge approve foreclosures, which is not accurate because Massachusetts is not a judicial-review state.


Many state and federal agencies, as well as housing counseling agencies approved by the U.S. Department of Housing and Urban Development, have received complaints from consumers who have used these relief companies to help receive loan modifications. Sometimes these consumers end up paying thousands of dollars, do not receive a loan modification, and then lose their homes in foreclosure.


Fourteen debt-relief companies were reviewed, including 12 which were contacted by Office of Consumer Affairs staff. While only two seem to be in violation of the law against up-front fees, but many had high fees for their services and promised to reduce monthly payments by 40 to 60 percent. Many of these companies offer debt settlement services, which require consumers to voluntarily stop paying their creditors and contribute to a trust account that the company will offer to the creditors to settle the debt. However, stopping payments directly to creditors will hurt a consumer's credit rating, but few debt relief companies informed consumers of that fact. Those that did falsely minimized that impact and said it would be a temporary situation.


Many consumers have used debt-relief services in an attempt to reduce their credit card debt, only to end up with damaged credit history and very high fees paid to the relief company, ranging from 40 to 60 percent of any savings the company gets for consumers. Federal Trade Commission regulations cover debt-relief services marketed by phone, and it is violation of the regulations to solicit an advance fee for debt relief services. The two companies who appear to charge up-front fees, Lexington Law/, and Debt Consolidation Corp., will be referred to the FTC by the Office of Consumer Affairs.


Consumers who need help managing their debt or avoiding foreclosure should consider the following tips before beginning to work with a for-profit debt or foreclosure relief company:


· Contact one of the numerous non-profit organizations, such as or other foreclosure prevention services linked on ;

· Avoid using companies that ask for an up-front fee;

· Avoid using companies that do not disclose the costs of services up front;

· Avoid using companies that promises or guarantees your debt or mortgage payments will be reduced. No one can make that promise;

· Request as much information, in writing, as possible about the services before agreeing to work with any company.


The Patrick-Murray Administration's Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education, and also works to ensure that the businesses its agencies regulate treat all Massachusetts consumers fairly. Follow the Office at its blog, Consumer Connections, and on Twitter, @Mass_Consumer.