Picture this: You're eager to take advantage of today's troubled real estate market and buy a foreclosed house at a fire-sale price.
The problem is you don't have much money for a down payment. And your credit files are scuffed up with late payments.
What you need is a service that can help put it all together for you -- linking you into lists of available foreclosures, credit repair, and even low-down-payment mortgage financing.
Companies that promise to do at least some of these things -- especially to fix your credit -- ply their wares aggressively on the Internet. But can they really do what they claim? Based on a recent settlement by the Federal Trade Commission, the only conclusion is: If the deal involves paying money upfront, don't do it.
According to a complaint by the FTC filed in U.S. District Court in New York, the Home Buyers Consulting Network Inc. of Raleigh, N.C., promised would-be buyers that it could raise their credit scores by 50 points to 100 points, help them locate foreclosed houses through a network of participating agents and connect them with low-cost mortgage money to complete the deal.
Through online and telephone pitches, Home Buyers Consulting Network and its affiliated firms -- GoodCredit.com, the Good Credit Company and 0Down HomeBuyers.com -- allegedly guaranteed clients that they could "remove accurate, negative information from [their] credit reports permanently, including bankruptcies and past due bills," according to the FTC's complaint. For their services, the companies typically requested an initial payment of $99 for credit repairs and $399 for credit and home-buying "consulting" services. The client also had to agree to a minimum contract period -- anywhere from six months to 12 months -- and make weekly or monthly payments of $19 to $49. The companies promised to refund all monies except $99 if the customer was not satisfied.
After consumer complaints and an investigation in cooperation with North Carolina authorities, the FTC filed suit against Home Buyers Consulting Network and its chief executive, Douglas Andersen Moore, for allegedly violating federal credit and consumer protection statutes.
Among the claims:
Home Buyers Consulting Network and its affiliates falsely promised clients that they could scrub records of even the most severely negative information, even though they were not able to do so when the information was "accurate and not obsolete."
