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November 25, 2009

Careful whom you call for mortgage help

If someone offers to help modify your mortgage for the low-low upfront fee of $3,500, run for the hills. That was the state of Maryland's advice Tuesday as it issued cease-and-desist orders to five loan-modification companies, firms it alleges took that sort of money from hundreds of cash-strapped homeowners and then did absolutely nothing.

The orders were part of a continuing nationwide effort to crack down on loan-mod scams, which have flourished like mold in a damp basement as the housing-market crash worsened in the last two years.

Cease-and-desist orders went to Equity Recovery Services LLC, U.S. Equity Solutions LLC, Save My Home USA Co. Inc., GIAN Inc. and Help Modify Now Inc., along with affiliates and arms operating under other names. The orders were among 118 legal actions across the nation, the Federal Trade Commission said. (Here's a post about a previous wave of legal actions in July.)

Among the online complaints from consumers is this one: "Save My Home USA LOST my home!"

Stephen Prozeralik, assistant commissioner for enforcement at the state Department of Labor, Licensing and Regulation, said it's illegal in Maryland to charge upfront payments for loan-modification help. He recommends against going to any company that charges for such assistance -- he suggests a nonprofit housing counseling agency, the HOPE NOW Alliance or a direct call to your mortgage servicer -- but you definitely don't want to sign on with a firm demanding its fee before the work is done.

The problem is twofold: Homeowners who can't afford their mortgages really can't afford to spend several thousand dollars on mortgage help. But when firms take the money and do nothing, the state says, they're also robbing borrowers of valuable time that could have been used for actual loan-modification attempts.

"The majority that we're investigating, they're charging the fees and they're no service whatsoever for the money they've collected," Prozeralik said. "They essentially take the money and run. They don't contact the lenders. They have no ability or even intent to get a loan mod for the person."

Prozeralik said the average fee he's seen Marylanders pay is about $3,500. But he's seen charges as low as $900 and and high as $8,500.

Some of the companies the state is investigating are local. "But the majority of our scammers have come from California and Florida," Prozeralik said -- big housing-crash states. "They put up a pretty website and it just attracts the customers that way. They make outrageous claims ... They'll say, '96 percent success rate' or '100 percent guarantee that we can modify your mortgage.'"

Those are, he notes, "the magic words that desperate people want to hear."

The big foreclosure scam used to be equity thefts -- so-called consultants targeting struggling borrowers whose homes were worth more than their mortgages. But so many people are under water these days that upfront fees are the "it" scam.

"They're learning from each other," Prozeralik said of the scammers. "One group of people will start a company, and then one person will say, 'Why am I working for him? I can make as much money stealing on my own.' And they'll branch out."

He added, "The money is unbelievable. It's almost as much as the equity thefts."

Think you've been scammed? The state asks you call the Office of the Commissioner of Financial Regulation, 888-784-0136. Or you can call the Federal Trade Commission at 877-FTC-HELP.

Posted by Jamie Smith Hopkins at 7:30 AM | | Comments (9)
Categories: Mortgage fraud/scams, The foreclosure mess
        

Comments

I can't beleive that people would stoop so low to take advantage of people in this situation. It is obvious they are struggling to make ends meet. Some people are so greedy that they lose all morals & can't tell right from wrong.

I have also seen some companies get excellent results for borrowers. There are a lot of people that are hurting and need professional help.

The correct finger should be pointed at the company that promised to process these clients files - Richman and Associates, JL Richman, Jim Richman, Home Retention Programs or whatever other name they are using these days! They are the ones that boasted a 97% success ratio, "were a 9 year tenured company", had lawyers involved etc.......

Borrowers can get a loan modification on their own. Someone should write an article in the paper to explain the steps that are taken to get it done. It's not that difficult. It is a long process, but anyone can do it. These loan mod companies are former sub prime mortgage brokers looking to make a buck from the mess they helped create.

1. Call the customer service number and ask to be directed to the "Loss Mitigation Department"

2. Ask them to send an application for a loan modification package.

3. Make sure you have past 2 years tax returns, 2 most recent pay stubs, 2 months bank statements.

4. Make sure you have a list of all monthly expenses.

5. Send in the package to the address listed on the application. Also, fax a copy so you have proof you sent it twice. Send the package certified mail or by courier (fedex, ups, usps).

6. Follow up EVERYDAY to make sure the package was received. When they confirm it has been received, call at least once a week to check the status.

Vultures prey upon stressed out homeowners. Legitimate loan modifications have not had widespread success, making borrowers "easy picken's" for the predator. Not all borrowers will qualify, but we must have a mandatory analysis of loan modifications.
Ray-the scammers are not "professional help". The so-called "certified" loan modster often has no license anywhere, let alone MD. Most non-profit housing counselors are HUD certified and MD's pro bono (free) attorneys are trained by and themselves licensed attorneys. There is no need to pay.

Wake up to the game! Sure the stressed out home owner seeks help and gets duped by these mortgage rescue thieves. But the only reason they end up getting duped is because they couldn't deal with the other thieves. Modifications don't work. These lenders know your financials from the start. They know where you stand. They request your financials only to buy time for a few months. Then they tell you to resubmit your financials because months have passed while they file the N.O.D. And their new offer is adding all the late months, fees, and interest to the back of the loan. Your option is to take it or leave it. Why deal with the poor and unemployed. They're only going to request to modify again. We already ripped them off once with bad loans. It's best to foreclose and take a 30% loss to resale it. The tax payer already covered it.

Careful whom you call for mortgage help - Very helpful article for Maryland homeowners. The Maryland Dept. of Housing and Community Development (DHCD) would like to remind homeowners that Governor O'Malley started the HOPE Hotline two years ago to get them in touch with housing counselors who can help with foreclosure problems. It is free of charge, and homeowners will be referred to housing counselors in their own community. The toll free number is 1-877-462-7555. For information on what you can do to prevent foreclosure, click on www.mdhope.org.

Jacqueline Lampell
Director, Communications & Marketing, DHCD

Just thought I'd mention that the Rizzo post is a bit confusing in that he doesn't say whose customer service number one is to call --- your existing mortgage lender? Your bank? Any bank or mortgage lender?

Lisa, the do-it-yourself way of trying to get a loan modification usually involves calls to your mortgage servicer -- the company to which you send your monthly payment. Sometimes the servicer and mortgage holder are one and the same; often not.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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