Mortgage-relief scams on the rise

A nonprofit housing agency says reports of fraudulent relief schemes are up almost 60% this year. Beware of companies that ask for money upfront.

By Teresa at MSN Real Estate Apr 16, 2012 1:38PM

Hands exchanging stack of hundred-dollar bills (© James Lauritz/Getty Images)As federal programs to help homeowners avoid foreclosure have increased this year, so have foreclosure-relief scams.

 

The nonprofit Homeownership Preservation Foundation reported last week that reports of mortgage foreclosure scams have jumped almost 60% this year.

 

“Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” said Colleen Hernandez, CEO of the foundation, in a news release.  “Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided.”

 

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Last month, the Federal Trade Commission got a federal judge to shut down a California operation that allegedly scammed homeowners out of more than $1 million with false promises to help them avoid foreclosure.

In those cases, the companies, owned by Sameer Lakhany of Santa Ana, Calif., and operating under a variety of names and with multiple websites, were running two types of scams:

  • A traditional mortgage-relief scam in which they charged homeowners $795 to $1,595 for "forensic loan audits," which the swindlers said would force their mortgage companies to give them loan modifications with favorable terms. According to the FTC, the company representatives falsely portrayed themselves as employees of a nonprofit housing counseling agency or HUD-certified housing counselors. The representatives said the homeowners' loan modification applications would be substantially delayed if they did not have such a forensic audit.
  • A scheme in which they promised homeowners they could stop foreclosure by joining "mass joinder" lawsuits challenging their mortgages. According to the FTC, the group masqueraded as a law firm called Precision Law Center and charged homeowners $6,000 to $10,000 to join the suits but provided no services.

In general, legitimate mortgage-relief efforts don't involve an upfront payment. Federal law bans upfront fees for negotiating mortgage modifications in most cases.

HPF has a website listing six warning signs of a scam. The FTC also has advice on avoiding mortgage-relief scams. HFP encourages anyone who has questions to call (888) 995-HOPE.

 
13Comments
Jul 7, 2012 6:44AM
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Republicans and lack of regulation and a bastardized version of predatory capitalism. REPUBLICAN PRIVATE SECTOR VAMPIRES. See my blog for truths. stoptheinsanity.info for the TRUTH!
May 5, 2012 5:21PM
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Home buying is complicated with all ofl the contract terms and real estate verbiage that takes place in a purchase. I've owned 3 different homes and It was too nerve wracking for me to relax while making the deal. I think it's important  to know your bank and realtors personally. Deal with people that you know!
May 5, 2012 3:06PM
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Someone called me just the other day saying I filled out a form online asking for this kind of help. When I said "No I don't need any help." They asked "Oh everything is okay now?" I said "There never was a problem and I have never asked for any kind of help." They acted surprised. I told them to please remove me from their calling list. It had to be a scam. I have not had any financial difficulties. At least not enough to warrant asking anyone for help.
May 5, 2012 1:33PM
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These scams, as described, have NOTHING to do with government.  These groups were scamming people way before there was ever a foreclosurue problem in the country.  They were just doing other things, and now have moved up to the foreclosure "relief".  These people will never pay back anything close to what they have scammed, because they don't have anything left, or because they have socked it away into offsore accounts or deposits in other countries.  There have been thieves since the beginning of time, just as there have been murderers, adulterers, etc.  They will never go away as long as there is a monitary economy.  We would have to get rid of money/wealth/power to get rid on them.  No use getting upset.  The courts do the best they can, but it seems the crooks are faster and smarter, in most cases.
May 5, 2012 12:32PM
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They are too big too fail !  Another Obamma Failure of leadership gone wrong . The Housing and Banking

 

Fiascos were the direct Failure of leadership that a Community Organizer could not have known how to deal with, because he hd no experience of any kind ! Voting "Present" does not make you Presidential

material! 

May 5, 2012 10:00AM
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If the lenders/investors would do the right thing and work with the borrowers there would not be anyone for the "scammers" to scam.
Loan modifications can often be done by the borrowers themselves using their lenders website but...they do not make it an easy process. As a matter of fact they seem to fight the borrower every step of the way. For example, if you fax in your paperwork as they recommend, I'd say there is a 20% chance that everything you sent will get into a file. And, until every single requested document gets into a file, that file will not assigned to a negotiator for consideration for a loan modification. 
Solution, don't fax in your paperwork, FedEx it with a signature required upon receipt. Make sure all of the required forms and documents are complete and up to date, keep copies and a call log of when you contacted the lenders and what was discussed. Always get the name or employee # of whomever you speak to. Be persistent, call for status updates every week or two.

observer51, don't give up!

May 5, 2012 9:22AM
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I think it all comes down to one thing too...greed. The rich want to stay rich, even if that means that the middle class has to get poorer.  It's all about the money. How long before the economy totally collapses? 

May 5, 2012 9:07AM
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Yes there a scammers out there but there are also people that truly help. I have been assisting homeowners figure out their next move, whether it be a modification, deed in lieu or a shortsale. My problem is that I do not charge enough and I am  losing my home which I rent.......there are no programs out there for renters. I have kept people in their homes for 2 yrs paying nothing but as a renter you are out in 2 months. Damn I am pissed. But I do not not have 1 client that is unhappy, they all have a mod or shortsale and have moved on. God will shine his light on my family.
May 5, 2012 9:05AM
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Morgage relief scammers deserve a taste of their own medicine. They shouldn't get off easy with just a few years in jail. They should have to pay rent on the properties they scammed, say double the morgage payments, until the owners get them back free and clear. The IRS should put them in a 1,000 per cent tax bracket on their stolen money with hefty late pay fees and tax evasion fines if they miss the two second filing deadline. When they go to jail, they should pay rent on their cell equal to the combined mortgage on all the homes they ripped off.

 

Scammers love wrecking other peoples lives so they deserve to have their own ruined. They've earned it. If they don't like it they can change their names to one of their great heroes. May I suggest Hitler, Stalin, or Pol Pot. If they won't pay, then they should become citizens of North Korea, whose government they love.

 

Scammers should suffer the consequences of their crimes. Sending them to jail for 10 years or so is like letting them pay one cent on a billion dollar debt and getting to keep the rest.      

May 5, 2012 7:23AM
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jnewby....you got yourself mixed up with crooks because you didn't look before you leaped....tough luck...learn,get through your coming bankruptcy and purchase title insurance when you buy your next home
May 5, 2012 3:19AM
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This is funny. People with mortgage problems, (myself included) have already been scammed by the banks. I guess at this point in history, scamming is okay.

PS, to gmac, we're not done.

Apr 23, 2012 9:05AM
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What rights does a holding company that paid a s 7000.00 debt on Chase mortgage. The home was bought by me at 149,000, I put up 75,000 equity. the existing balance is 68,000. I have checked with the bank and chase is still 1st on lean, loan is still in my name. What do I need to do to get the holding company off  my loan. . No modification. My loan amt is 958.00 a month, but I have been having to pay the holding company 1,400.00 a month since 08/2011 and can nolonger afford this.Again I  checked with the bank, my name is on the loan, chase still owns the loan. Where do I go from here, I can't afford a lawyer . I am now 23 days behind on loan.

Jnewby

Apr 16, 2012 9:37PM
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HUD built a firewall....No seller commissions for mortgage payments...

/www.rentechdesigns.com/serviced_apart.html
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