Tips to avoid loan modification scams

The Federal Trade Commission has teamed with local and state authorities in a nationwide crackdown on loan adjustment scams, as reported in the Business section of The Times.

But one of the biggest challenges the FTC and its allies are up against is reaching homeowners looking to stave off foreclosure before the scammers reach them and dupe them, promising mortgage modification services that they never deliver.

The FTC produced a video on how to avoid scams as part of its inter-agency crackdown, dubbed "Operation Loan Lies," which can be watched and downloaded at www.ftc.gov/YourHome, or below.



The FTC's video, "Real People, Real Stories," is also available in Spanish, which can also be seen below.



For those seeking to lower their monthly home loan payments, here are some tips on avoiding scams. The suggestions come from the FTC and the office of California Atty. Gen. Jerry Brown:

• The first thing anyone seeking to modify an existing loan should do is call his lender.

• Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant. Do not ignore letters from your lender. Many lenders are willing to work with homeowners who are behind on their payments.

• Contact housing counselors approved by the U.S. Department of Housing and Urban Development, who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at (800) 569-4287 or www.hud.gov.

• It is illegal for foreclosure consultants to demand money before they give you a written contract  and before they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.

• However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the California Department of Real Estate for review.

• Do not transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later.

• Fraudulent foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. Beware -- this is a common scheme so-called rescuers use to evict homeowners and steal all or most of the home's equity.

• Do not pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• Do not sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer" who is actually a scammer.

Homeowners who think they have been ripped off can file a complaint with the California Department of Real Estate through their website here. The department also offers tips on how to avoid getting scammed and what to do if you think you've been scammed here.

Complaints can also be made directly to the FTC by phone at (877) 382-4357, the FTC's Headquarters or Financial Services Division in Washington, D.C., at (202) 326-2222. The FTC also has regional offices; in San Francisco at 901 Market St. and in Los Angeles at 10877 Wilshire Blvd.

HUD can set up homeowners with personalized guidance from housing counseling agencies they've certified at (888) 995-4673. More information on how to find free certified counseling services is available at HUD's guidance website at www.hopenow.com or the Obama Administration's website loan modification website, www.makinghomeaffordable.gov.

-- Nathan Olivarez-Giles

Comments

[Mockingbird]

It will take more than 6 months to process Loan Modification from Wells Fargo Home Mortgage, still they will tell you under REVIEW. You've to be behind for 3 months in your mortgage payment in order Wells Fargo will act. Why does the lender delay the processing for current borrower? What's your thought????

[LA-renter]

When we sink into a dictatorship of super Americans, a problem like this will be solved by a few well-publicized, prime-time televised executions... or at least it should be.

[Cal]

Tips to avoid loan modification scams.

Here is my #1 tip.. pay your mortgage

[LARealtyReport]

When the market reaches the point where short sales account for more than 50% of all sales ( approx 24% for '09 currently), loan modification will seem less attractive by comparison. After all, why invest in a depreciating asset when you can cut your losses and eventually buy at a lower price?

[Mary Sullivan]

Hope Now was set up and funded by 50 of the largest mortgage servicing companies in the US, and as of January 31st ,they released their results in helping over 1 Million families. How did they do? Less than 20% of those homeowners actually got a modification. Yes, there are plenty of scammers out there and two of the families shown used their intuition and avoided the scammers, the third family just blindly went with the first company they talked to. Legitimate loan mod professionals exist and are there to help people and represent them to the lender, who does not have the homeowner's best interests at heart. I'm glad the scammers are being cracked down upon but buyer beware is more apt here including be aware of who is funding Hope Now.

[Mr. Man]

Some of the tips in this article are common sense. Don't sign a contract you don't read. Obviously! However the point Jerry Brown doesn't make (because he still doesn't get it) is that once you've tried going directly through your mortgage holder for a loan mod and have been unsuccessful that the companies with the highest success rates are the for-profit companies. They don't get mods every time but they have the motivation to try harder. They constantly out perform the non-profits and free services.

Sadly, Jerry Brown is on a quest to shut down all these for-profits which in the end will only hurt the home owners. I actually agree that it's the holders of the mortgages which need to take responsibility but why is Jerry focusing his attention wrongly on companies trying to help?

[carly]

Time to send the loan modification vultures to jail. There is a related post at http://iamsoannoyed.com/?page_id=588

[Feldman Law Center]

Good information.

[Loan Modification Help Center]

Good Information listed on your site. I will check regularly.

[Eugene Eugster]

The reason Jerry Brown is concentrating on these loan modification companies is because the vast majority of them are fraudulent companies charging thousands of dollars for simply making a phone call to the lender which the borrower could do themselves. The borrower either qualifies for a loan mod or doesnt. There is no secret way of getting them. One such fraudulent company is Wall Street and Associates, who claims a 99% success rate (impossible) and also claims to be part fo the Obama mortgage relief plan. I was targeted by this company and after doing research found they have no government affiliation. Even their logo looks like a goverment seal. They tried to charge me $6,500 for a modification. They claim the sign up over 300 clients a month. This is why they crack down!

[repo Homes]

To avoid everything simply pay the mortgage, but actual situation is complicated to that. So, some of these tips are really good. But try not to get another loan to make your problem bigger!

[mrincomestream]

It's a nice racket 4000 a head, answer a few phone calls, send a few letters and tell the owner to get lost...the mob wishes it had it so well...

[Wilferd Thometo]

"The suggestions come from the FTC and the office of California Atty. Gen. Jerry Brown"....I find this interesting. For instance, suggestion 2 states "Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant". The word "probably" means exactly what? The lenders are not sitting in their office with a big halo over their head hoping more homeowners will call so they can help save their homes. The majority of "lenders" are actually "servicers" with a fiduciary obligation to the true owner of the loan, the investors. You know, the people who purchased those toxic mortgage backed securities that wall street bundled and sold as triple A rating around the globe at the expense of the people. The role of a servicer is to reduce loss, NOT help the homeowner because they care. I am not saying that one should go and get scammed either. I am saying that the FTC and Jerry Brown are oblivious to the "real" dilemma that faces homeowners and their families on the brink of becoming homeless and putting their faith in their so-called lender. The lenders cause more stress by requesting more paperwork, or saying they did not receive a fax, or sending you to the wrong unit, this of course after you have been on hold for an hour or more. Why? Because the lenders are overwhelmed with the calls, they cannot take on more salary in this economy to hire help, and the reps use some of the means above as stall tactics. Who does not think this is true? Only those that have NOT had to experience it. Don't worry Jerry Brown, can I call you "Jer"? Drinks are on me...just as soon as I get my primary home and my rental property back that I lost speaking to those lenders you mentioned in your list that were just elated to "hear" from me.

[E]

Primary home AND rental property Wilferd Thometo?

Sounds like you wanted to be a big shot landlord and bit off more than you can chew.

Why should your tenants tax dollars help you out of a bind you placed yourself in?

[Wilferd Thometo]

People never seem to amaze me...especially the following post:"Posted by: E | September 12, 2009 at 11:34 PM".
What type of name is "E"? Is that an abreviation for "e"quivocate, "e"nigma perhaps? I know, it is short for "e"dict as in a decree. Since you have decided to judged me, the word seems to work. Well Mr. "e"dic-t, biting off more than I can chew? Can you elaborate? I do not understand your use of colloquialism. Be a "big shot landlord"? Are you old enough to be on this site, young man? How do tenants tax dollars help me if they abandoned the property after several months of no payment? I bet I caused everything, even the mortgage backed securities debacle that you might educate yourself on someday instead of taking shots at circumstances that you are not qualified to comment on. Take Care E-dic...t

[Eric Smith]

I called Guardian Advocate Group to modify my loan way back in June. I talked to a guy named Gregg Shwack and was convinced that this was a legitimate loan modification company. I also had small email communication with Mike Luchen (CEO), who also assured me that I was in good hands.

The web site http://www.guardianmods.com/ states that the processing team will keep you informed but this was really not the case. I had to call just to get a status and I would also shoot emails to Gregg and he would respond with few words like, "We are working on it". That's the status I got for the past 3 months.

About 3 weeks ago, Gregg Shwack directed me to call their processing department to get updates on my loan. The first time I called, the lady "Gail" told me that their computer systems were down and that she would have to get back to me the following Monday. Monday came and no call so I called and got an answering machine that says their moving and would re-open that wednesday in the evening. So, I waited to Wednesday evening and called but still got the answering machine. I tried calling for the rest of that week and got that same answering machine. At this point I was frustrated so I called Gregg Shwack again and left a message to have him call me back. I didn't get a call so the next day I called and left another message that I called.

Now, every time I call, he is in a meeting. I've sent emails to Gregg Shwack, Mike Luchen and many others trying to get someone to contact me back so I can get a refund on the loan modification that never happened. I was promised by Gregg Shwack that all my money would be returned so I want it to be returned. The last email I got from Gregg Shwack was this: "Your.file is complete !!!!! 98 percent of all files from your lender has been REJECTED!!!!!!! IAM SAD TO SAY.THIS.MAYBE THE.CASE" Well, if that's the case, I should get a refund as promised! Now he won't talk to me or neither will no one in his company.