Careful whom you call for mortgage help
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.