Even though the American economy has begun showing slight signs of improvement, many people are still feeling the effects of our recent recession and are faced with losing their homes. For example, RealtyTrac reports that one in 3,092 housing units in New Jersey received a foreclosure filing in November 2011, and roughly 38,000 properties were in some stage of the foreclosure process.
As a result, more and more Americans have turned to bankruptcy to help them get through tough financial times and jumpstart themselves towards recovery. However, individuals and their families have tried other means of protecting their homes as well. The Star-Ledger reports that foreclosure consultants have been very busy lately offering services such as raising a homeowner’s credit rating or changing the terms of an existing mortgage.
Unfortunately, many of these services have turned out to be scams and have left homeowners worse off than before. Although there are some very legitimate foreclosure service firms in New Jersey, including qualified attorneys, far too many homeowners were left high and dry after tendering large upfront fees.
Government’s Response: Foreclosure Rescue Fraud Prevention Act
Governor Chris Christie signed the Foreclosure Rescue Fraud Prevention Act on December 20, 2011. This new legislation now requires all foreclosure consultants to be licensed by the state Department of Banking and Insurance. Additionally, consultants are now prohibited from collecting any fees until they complete the terms of the agreement and obtain relief for the homeowner.
Finally, consultants face large fines when they violate the new law. A first offense results in a $10,000 fine, with a $20,000 for each successive offense. The fines are collected from a newly-mandated bond that consultants must post with the state before they are allowed to conduct any business.
Impact for Homeowners
The changes made by New Jersey lawmakers received acclaim from consumers, their advocates, and the banking industry. Homeowners can now feel more confident undertaking foreclosure advice and can accurately verify registration with the DBI.
Please note, however, that loan remodification is not appropriate for everyone. Speak with an experienced attorney for an analysis of your financial situation, to discuss your options, and to develop a plan for your unique situation.
