Unfortunately, when people are in financial trouble, a lot of unscrupulous businesses are only too happy to “take care” of vulnerable families and individuals.
The National Foundation for Credit Counseling’s motto is: “Knowing the difference can make all the difference.” NFCC is a national not-for-profit, 501(c) 3 organization, accredited by the Council on Accreditation for Children and Family Services, to which credit and housing counseling agencies, such as CCCS of McHenry County Inc., belong; it is the national voice for its members, which are nonprofit, mission-driven, community-based agencies.
NFCC members, often known as consumer credit counseling services, represent accredited agencies with high standards, ethical practices, certified counselors, and policies which help consumers achieve financial stability. NFCC member agencies provide a variety of services including: Budget counseling and education; debt management programs; counseling referral services; financial literacy courses; bankruptcy counseling and education; and housing counseling.
Daily reports surface in the news from the Federal Trade Commission and the attorney general’s office that lawsuits have been filed against unscrupulous businesses which extract large fees and deliver little or no service to their clients. Possibly worst among the offenders are the businesses which promise to assist people whose homes are in foreclosure. Since foreclosure filings are public record, these businesses have no trouble accessing the names and addresses of families in this vulnerable position.
Promises are made that foreclosure can be ceased and/or mortgages can be modified, but only with the help of these supposedly “professional” providers. When confronted by the prospect of the loss of their homes, many persons fall prey to these businesses which promise the salvation of the home for only a few thousand dollars upfront.
First of all, it is illegal to charge upfront fees for U.S. Department of Housing and Urban Development (HUD) mortgage assistance, and secondly, HUD-approved agencies do not charge anything for their approved counseling and modification assistance. In Illinois, since it is a judicial state with respect to foreclosure, a notice of foreclosure does not represent an immediate seizure of a homeowner’s property. Often foreclose may take several months before a sheriff’s sale takes place. In the meantime, with the help of a HUD-approved agency, homeowners are given a list of options, which they may choose to pursue.
Options range from bringing the mortgage current, negotiating a loan modification, initiating a short sale, which carries with it potential downsides, or taking advantage of a selection of government assistance programs, one of which, the Hardest Hit Program, may involve a forgivable loan of up to $35,000 to bring the mortgage current or pay it forward. The latter is designed for homeowners whose delinquency was caused by loss of income. Whichever option the homeowner picks, he or she should know that an honest, well-trained, HUD-approved counselor is providing free advice and assistance.
Mortgage assistance is not the only area where people are being damaged financially. Those with credit card and unsecured loan debt also are vulnerable to scam artists, who promise that they can effect settlements with creditors, which individuals can actually do for themselves. Here again, while settlement is a legitimate way to expunge debt, individuals need to know the downsides to this option. Settlements may result in lowering credit scores or even include large tax liabilities for the forgiven amounts.
NFCC members offer debt management programs, (DMPs) in which clients make monthly payments for credit card and/or some loan debt with reduced interest and fees, which have been negotiated with creditors. DMPs last no more than 60 months and usually result in large interest savings.
The more information a person has in hand when attacking financial problems, the better. A lot of emphasis these days is on personal credit scores, which influence whether certain financial options exist for individuals and whether borrowing will be allowed at reasonable interest rates.
A good place to start is to access a free credit report from any of the three major credit reporting bureaus. This can be done at www.annualcreditreport.com. This allows a person to see what has been reported by creditors and if any false information has been reported. False information or mistakes can seriously affect a person’s buying power, especially for a large item, such as a home or automobile and should be corrected immediately. While the reports are free, there is usually a fee to obtain the actual credit score.
The moral of the story is: Before seeking help with financial problems, be sure to check out the provider.
Are they HUD-approved for housing? Do they belong to a national organization which requires audits, accreditation and strict professional standards? What is their Better Business Bureau rating? Are they members of a community organizations, such as United Way? Doing a little homework upfront will save a lot of heartache and potential financial disaster later.
To discuss accessing help for housing, credit card debt or credit problems, call me at 815-338-5757.
• Virginia Peschke is executive director of Consumer Credit Counseling Service of McHenry County based in Woodstock.