Loan Modification Explosion

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Mortgage scams are widespread

Mar 17

Posted by admin in Homeowner Scams | No Comments

By PHIL MULKINS World Action Line Editor
Published: 3/17/2009  2:21 AM
Last Modified: 3/17/2009  4:57 AM

.leadp { font-size:14px; color:#626466; } Dear Action Line: Last night, I received a call at home — one of those recorded messages — about the new home loan modification program. It said people could keep their loan with the same mortgage company. All I needed to do was push 1 to talk with a loan counselor. Needless to say, I hung up. I’m concerned this was a scam. What have you heard about this? — M.M., Tulsa.

Margo Mitchell, president and CEO of Credit Counseling Centers of Oklahoma, said there are mortgage scammers actively calling Tulsans due to the mortgage meltdown and credit crisis.

“I know the mortgage companies are snowed under and not soliciting business by phone,” she said. “I’m concerned a consumer will be taken advantage of — become desperate enough to jump for a quick solution to a mortgage problem.”

Mitchell recently received a press release from the National Foundation for Credit Counseling warning of a rise in mortgage scams. Her agency is a member of the foundation, which promotes financially responsible behavior and helps its members deliver high-quality financial education and counseling services.

“Be wary of anyone calling to offer a foreclosure rescue plan,” the foundation warns. “Foreclosures are public record that crooks can gain easy access to for information on at-risk homeowners.

“The callers know all the right things to say.” They call themselves “mortgage rescue specialists, mortgage modification specialists or loss mitigation specialists.” Their specialty is scamming

desperate homeowners who can’t afford it.

They often say they represent government agencies “or are associated with your loan.” The first red flag: THEY call YOU. You should deal only with your mortgage issuer and only when you have initiated the call. Don’t talk to those who call you, don’t sign anything they bring to your door uninvited. Never pay for services not yet rendered. When they try to rush you into signing, show them the door!

Part of the government’s plan to help distressed mortgagees involves encouraging them to find out who carries their loan: Fannie Mae or Freddie Mac — something average homeowners don’t know, the foundation says. You don’t need to pay someone to find out — simply call Fannie Mae at (800) 732-6643 or Freddie Mac (800) 373-3343. The same information is available online at tulsaworld.com/FannieMae or tulsaworld.com/FreddieMac.

The Consumer Credit Counseling Service, 4646 S. Harvard Ave., is a service of Credit Counseling Centers of Oklahoma. See tulsaworld.com/CCCS. It educates and aids people who have gotten into debt or fallen behind on their mortgage payments. Seek an appointment at 744-5611. Outside the Tulsa dialing area, call (800) 324-5611.

Phil Mulkins is a member of the agency board of directors.

East Coast Loan Modification Firm Accused of Scamming Homeowners

Mar 10

Posted by admin in Featured, Homeowner Scams | No Comments

It looks like American Modification Agency or AmeriMod is in the papers again and it isn’t for fixing loans and saving homes.

I wrote about the Long Island based loan modification firm back in January when they were sued in a $100 million class action:

Former sales agents say working for AMA was a nightmare. They received no training or salary and relied on commissions of 15% to 25%. Many of the clients they brought in never had their loans modified by the firm’s processors, with whom they were not allowed to speak. “We’ve had clients in for well over 200 days that aren’t done,” says an agent who was hired off a Craigslist ad and worked at AMA for six months.

Titus Foster says he brought in 12 customers during a stint at AMA last year, but only three had their mortgages modified. “They’re very willing to swipe people’s credit cards, but when it comes to actual work, nothing is done,” he says. Another former employee who worked at AMA last summer and fall says he brought in 15 customers, but none of the loans were modified. “It was, get it in, get it in, get it in,” he says. “Well, we got it in, but then they lost track of it.”

Former employees say the company grew too fast, too soon and describe a frenetic, almost circus-like atmosphere in the office. They recall President Sal Pane riding around the office on a Segway scooter drinking Red Bull and exhorting agents to bring in customers. “Each time we’d turn in a file, we’d go out on the floor and hit a gigantic brass gong hanging from the ceiling,” says one former employee. “Everybody cheered one another,” yeah, yeah, yeah.’

Read more about the American Modification Agency, AKA AmeriMod from the New York Daily News:

Bronx woman says she’s a victim of bogus foreclosure ‘helper’:

Victoria Vassell of the Bronx thought she had found the antidote to her foreclosure fears.

The 66-year-old home attendant signed up with the Long Island-based American Modification Agency, one of the new “foreclosure consultants” that sprang up after the housing bubble burst to “help” homeowners drowning in debt.

Last August, she paid the company $4,333 to reduce her monthly mortgage payments before her adjustable rate kicked in. She signed a waiver authorizing AMA to negotiate with her lender.

The company told her to stop paying her mortgage, which soon became delinquent. Then the bank threatened to foreclose on her two-family Bronx River home.

Eventually, she got her $3,200 monthly payments cut to $2,954 by herself, but she’s still mad.

“I had to borrow that money, and they take it,” she said, noting she’s still trying to get her money back, even though AMA promised her a refund.

“They give me all the runaround in the world,” she said.

Here is another article from the NY Daily News. They must be really investigating this firm and I applaud their efforts.

Foreclosure crisis brings out scam ‘helpers’ all over nation

Homeowners desperately trying to keep their houses have a new scam to worry about: unscrupulous “foreclosure consultants.”

Blossom and Francis Joseph of the Bronx say they’re victims of one.

When Blossom lost her job and the couple fell behind on their mortgage, she saw a TV ad for a “foreclosure consultant” promising to lower their monthly payments.

She called the American Modification Agency of Long Island and paid them $3,190. American Modification then did nothing, they say, and the couple wound up in foreclosure anyway.

“If he knew he couldn’t do what he promised, he should have not taken the money,” Francis Joseph said, sitting in the brick, one-family home in Wakefield he still hopes to keep.

In December, the Josephs joined a class-action suit against American Modification that claims the company has collected fees from more than 7,000 homeowners nationwide – all potential victims.

For consultants like American Modification, business is booming, a result of the foreclosure crisis and homeowners with high-interest mortgages trying to keep their homes.

Learn how to avoid mortgage and loan modification scams

Mar 10

Posted by admin in Homeowner Scams, Loan Modification Tips, free foreclosure help | No Comments

Is it me or are “loan modification scam” companies becoming as prevalent as mortgage broker chop shops were a couple years ago?  I don’t mean to be overly critical, and I understand many do good work, but I have heard stories of “former mortgage industry professionals” charging thousands of dollars to negotiate with the bank on behalf of the borrower.

At the risk of sounding like a protectionist, isn’t this something that should be done by a lawyer?

I have so many people come into my office who were victims of “predatory lending” and then victims of this next loan modification craze.

Take for instance just last month, I had a client tell me they paid $15k to a “modification company”.  The company promised her they would reduce her balance and lower her interest rate to 5%.  This truly sickens me. The homeowners struggling with their payments are facing what can be one of the most traumatic experiences of their life.  This vulnerability unfortunately attracts those without regard for others plight.  Laws are in place to prevent this activity, but are not enforced enough.

Anyone else hearing about this stuff?

My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors… DON’T BE A VICTIM TWICE!

Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” These scammers are popping up like dandelions on a freshly mowed lawn. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere.

Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

In California there are laws prohibiting fees being charged to those in foreclosure (Foreclosure Consultants Act, CCP Sect. 2945).  I know this type of law is also common in other states.  I think we will see this law enforced more and more going forward, but as of now it seems like the wild west.  By the way, I was a mortgage broker before becoming an attorney and I have a great deal of respect for professionals in the industry, I just wonder about the “opportunistic” agents who may be continuing where they left off…

In California, the Department of Real Estate website (www.dre.ca.gov) lists the companies that have DRE “permission” to modify loans… add to this list any licensed California attorney, and that is where you should begin your due diligence when you seek help in California. Other states probably have similar laws, so check with your own state DRE.

In my opinion, the advantage of working with a law firm comes from the “whole picture perspective”.  Many homeowners have collateral issues, such as bankruptcy and deficiency judgments.  Lenders also often require homeowners to sign a release of any and all legal claims based on the origination and servicing of the loan as a condition of the loan modification.  It makes sense to have the loan reviewed to make sure there are not relevant claims being waived.  For this reason, we audit every loan file at the beginning of every loan modification.

Another point for having a law firm involved is the fact that a lawyer may have contacts within the legal department that provide a more expedient process.  Not always, but its at least another avenue to pursue.

Given the advantages, a law firm should probably cost more than a mortgage broker turned loan mod specialist.  Surprisingly i have found this not to be the case.  My suggestion to homeowners is to either do it yourself, or find an attorney that specializes in this area.  Sorry if this steps on anyone’s toes, but i think it just makes good sense.

Here is some advice from my partner, Paul Molinaro…

Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.”

These scammers are popping up like dandelions on a freshly mowed lawn. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere. Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

Here is some important loan modification advice and tips to avoid mortgage scams:

1) Loan modifications are easier when you are late on payments.  That being said, I never recommend someone miss payments unless they truly don’t have the ability to make them.

In other words, if you have to use a credit card to make your mortgage payment, the end maybe near.  At that point, I may advise someone to stop making the payment, since its really just a matter of time.  Other than that, stay current on your mortgage.  It will be harder to get a loan modification but your credit is still important.

2) Guarantees are simply misleading.  No one can really guarantee results.  The truth is, as an attorney, I am prohibited from making guarantees.

3) Hire a lawyer. As to the loan modification process, much of it can be done by non-lawyers.  In fact, it can be done completely by the homeowner himself.  This is also true of wills/trusts/divorces/etc.  But think about this? You are renegotiating a legal contract.

It’s practicing law and that’s my opinion.

Remember when you complete a loan modification, you are signing a new note that typically states you are waiving any and all claims associated with your mortgage up to that point.  What if there was a potential legal claim that would have saved you $100,000?  It’s not worth the risk.

Frankly, if you can afford to hire someone, hire a lawyer.  Otherwise, do it yourself.

4) Communication is one of the biggest complaints in most service businesses.  Law offices can be bad at this as well.  Try to find a law firm that is responsive to your calls in the beginning.  It’s not a guarantee you won’t have problems down the road, but it is at least an indicator.

That being said, let me give some general advise that may be of some use.

1) First, make sure you need a lawyer.  Not everyone does. Second, assuming you need a lawyer, determine what the purpose is.

2) You may be able to communicate directly with your lender and achieve the same results.

3) If you get a loan modification agreement on your own, you could then consult with a lawyer to review the details and make sure the contract is sound.  This may only cost you a few hundred dollars, as opposed to thousands.

4) Have you been scammed? If you think you may have legal claims against your lender or a loan modifications scammer, you will want an attorney that has experience pursuing these claims.  My suggestion is to talk with a couple at least  a few lawyers to get the right fit. Call your states BAR or county legal aid resources which you can Google and research.


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