The joint state and federal crackdown on outfits that fail to deliver on promises to help troubled homeowners negotiate loan modifications should be enough to scare the dickens out of anyone who is considering third-party interventions.
But if you still feel believe you need help dealing with your lender, a new website from FICO -- www.mortgagereliefonline.com -- offers struggling borrowers a highly credible (and free) way to assess their particular situations, chat with an approved credit-counseling agency and then engage their lenders in a meaningful dialogue.
FICO, formerly known as Fair Isaac & Co., is the company that devised the scoring system that lenders bank on to tell them whether would-be borrowers are a good risk. Now it is using those same analytics to help homeowners address the problems they are encountering when trying to get their lenders' attention.
"Now that the government has established guidelines for mortgage remediation, we're able to provide comprehensive solutions that address everyone's concerns," said Mark Greene, FICO chief executive.
Despite statistics that indicate that hundreds of thousands of borrowers have had their loans modified, thereby avoiding foreclosure, the truth is that most mortgage-recovery efforts have fallen woefully short.
Consumer complaints are too numerous to ignore. Borrowers say their lenders and the companies that administer their loans, known as "servicers," are difficult to reach and, when they are lucky enough to make a connection, are unresponsive to their needs. Some say they are not receiving any response at all.
Worse, studies show that perhaps half of those who are successful in persuading their lenders or servicers to rewrite the terms of their loans fall behind on their payments soon after their loans are modified.
The main reason for "refaults"? Most mortgage-relief efforts take too narrow a view of the borrower's finances, concentrating solely on the mortgage.
But FICO's new Mortgage Recovery Initiative, like the FICO score, looks at your other financial obligations, your total debt and your ability to manage that debt effectively, all factors that are part and parcel of your ability to succeed with a new mortgage or new terms.
Financially strapped borrowers -- even those who are not yet behind on their house note but believe trouble lies just over the horizon -- can go to the new FICO website, where they can find out whether they qualify for aid under the federal Making Home Affordable program. Making Home Affordable is the Obama administration's main effort to help as many as 9 million owners avoid foreclosure.
Visitors to the free online portal fill out a short, confidential form about their current housing and mortgage situation. That information is instantly evaluated, and the site reports back about whether you're eligible for a loan modification and credit counseling, a complete refinancing or debt counseling alone.
In a nutshell, the site pre-qualifies you, just as if you were applying for a new mortgage.
Next, professional credit counselors from Money Management International contact eligible borrowers within 48 hours for a free, confidential assessment. MMI and its Consumer Credit Counseling Service agencies make up one of the largest nonprofit, full-service networks in the country, and are certified by the Department of Housing and Urban Development.
The counselor will collect whatever additional information he or she deems necessary. And if the counselor believes you are eligible for relief in one form or another, a complete file will be assembled that can be delivered by you to your lender.
If you are not eligible for Making Home Affordable or other relief efforts such as Hope Now ( www.hopenow.com) or Hope for Homeowners (www.fha.gov), the program does not just cut you loose. You still might find some help with a debt-management plan through Money Management International, for example. That and other possible options will be discussed during your initial counseling session.
Even if you are eligible, though, there is no guarantee that your loan will be modified. Though FICO's advanced analytics determine eligibility for help under the government's mortgage-relief effort, the lender or servicer has the final say.
Although the next step is your lender's, FICO's Mortgage Recovery Initiative should at least get your foot in the door, if only because it could help lenders more effectively manage the large volumes of cries for help. And lenders are nothing if not swamped -- which is one reason scam artists have made a killing by promising to act as an intermediary with lenders.
The situation has become so menacing that the Treasury Department, the Federal Trade Commission and HUD, along with state crime fighters, last month vowed to stop those rogue companies before they can bilk people out of any more money.
"If you prey on vulnerable homeowners," Atty. Gen. Eric Holder said at a news conference with Treasury Secretary Timothy F. Geithner, HUD Secretary Shaun Donovan and FTC Chairman Jon Leibowitz, "we will find you and we will punish you."
Of course, owners themselves are the first line of defense against fraudulent loan-modification and foreclosure-rescue schemes. To protect yourself:
* Beware of the come-ons that promise to intervene on your behalf with your lender, stop foreclosure proceedings in their tracks, or claim a 97% success rate. These kinds of boasts are signs that a rip-off lies ahead.
* Don't pay for a promise. Keep your hand on your wallet if anyone asks for money in advance. Pay only for services rendered, after they are rendered.
* Make payments to your lender and only your lender. If you give your house payment to anyone else, there's a good chance that person will pocket it rather than pass it along.
* Run from any person or company that tries to give the impression of being part of the government. They are not. If you want to contact a government agency, type the Web address directly into your browser and look up any address you are not sure about. Use phone numbers listed on agency websites or in other reliable sources, such as the government pages in your phone directory.
* Second opinions don't work. If a lender has turned you down, you have been turned down. Don't pay for another opinion.
* For free, personalized advice from counseling agencies certified by HUD, call (888) 995-HOPE, a national, round-the-clock hotline.
Distributed by United Feature Syndicate Inc.