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Foreclosure consultants generally offer to stop foreclosure on homes and/or assist homeowners in restructuring their mortgage. Some companies may imply that they have an affiliation with a mortgage lender or with a government agency. In most cases, the companies do not have affiliations with any government agency or any special relationship with your lender. Generally, mortgage companies will only deal with the borrower on any issue related to the loan.

Complaints concerning similar offers allege that these companies misrepresent their ability to stop foreclosure, that they fail to perform services as promised, and that they deny requests for refunds based on non-performance.

In California, it is unlawful for a foreclosure consultant to charge or accept any compensation until they have fully performed everything they represent they will perform. California law also requires that any representative who solicits, induces, or causes a California resident property owner to contract with, or pay any consideration to a foreclosure consultant must have a bond from a surety in an amount equal to at least twice the fair market value of the real property that is the subject of the contract. In addition, the representative must hold a valid California real estate sales license. The representative must also provide the consumer, in writing, under penalty of perjury, a statement attesting that they are properly licensed and bonded. Failure to comply with these requirements renders the contract void. By law, the contract must also provide for a five day cancellation right, and no money may be collected prior to performing all the services set forth in the contract.

If your written contract does not inform you of your right to a refund or your right to cancel, you may cancel the contract at any time, without regard to the five day time limit. The Better Business Bureau suggests that property owners first speak with their lender before engaging a consultant.