Mortgage Fraud Victims

www.youtube.com/watch?v=5GQXy1IqxaI

In this video, Latour “LT”Lafferty, attorney with Fowler White Boggs, identifies which mortgage fraud schemes consumers should look out for.

On July 29, the FTC announced Home Assure LLC, a company allegedly deceiving consumers with promises it could save their homes from foreclosure, will pay $2.4 million to victims in a settlement with the FTC. The case is part of the agency’s continuing crackdown on scams that prey on financially distressed homeowners.   The agency’s complaint alleges “Home Assure LLC conducted a nationwide marketing campaign designed to take advantage of struggling homeowners by offering so-called mortgage relief and home foreclosure prevention services. Home Assure typically charged consumers up-front fees of $1,500 to $2,500.” Company representatives falsely claimed its “special relationships with lenders would enable it to get favorable loan modifications or stop foreclosures, and that the company had helped thousands of consumers avoid foreclosure.”

The FTC works for consumers to prevent fraudulent, deceptive and unfair business practices. The agency sends complaints to Consumer Sentinel, a secure, online database available to 1,800 civil and criminal law enforcement agencies Read more from this Tulsa World article.

According to the LA Times, Many mortgage lenders are “overwhelmed and disorganized but they continue to foreclose on borrowers who are actually in the process of finalizing a home loan modification that would ensure more affordable monthly payments. At a time when the housing market is flooded with foreclosed homes, this doesn’t help anyone. The federal government rolled their attempt to stem the foreclosure crisis with the Home Affordable Modification Program that was created to stop lenders from foreclosing while a modification is pending, but other initiatives don’t.  

California Senators Mark Leno and Darrell Steinberg are proposing to extend the same protection to all Californians seeking loan modifications. The California loan modification bill (SB 1275) would stop a home loan lender or mortgage service company from initiating the foreclosure process until after a mortgage loan modification application was denied. It’s a modest change that wouldn’t require mortgage lenders to change the terms of any loan modification program. Nor would it require lenders to do more to reach borrowers before foreclosing than state law already requires or to slow down foreclosures on borrowers who are beyond help.  The law would require mortgage lenders to notify borrowers who get behind on their home loan payments about the foreclosure process and the availability of home refinancing or loan modification options, if any. And if borrowers applied unsuccessfully for a loan workout, the mortgage company would have to send them a letter explaining why they were denied and how they can appeal the decision before filing a notice that the mortgage was in default.  The purpose of the bill was not just another attempt to help homeowners avoid making their mortgage payments; but it was created to help protect lenders from themselves.  A recent report revealed that Housing counselors say the No. 1 problem is poor communication between mortgage companies and distressed borrowers.

U.S. mortgage fraud reports jumped 36% last year as desperate homeowners and industry professionals tried to maintain their standard of living from the boom years, the U.S. Federal Bureau of Investigation said last week, calling fraud rampant and growing.  Leibowitz said that many who offer loan modification schemes deceive homeowners by posing as quasi-governmental agencies or implying that they are working with federal agencies and cautioned consumers to be aware of the scams.

According to Real Estate News Publication, Housing Crisis Under Fire, California loan modification scams lead the nation in loss mitigation fraud.  California Attorney General Jerry Brown said his office had sued 21 individuals and 14 companies accused of scamming homeowners, saying that many of the operations were based in Orange County, south of Los Angeles. Also Brown said that bogus loan modification scams had proliferated widely following the subprime meltdown and housing crash, to the point where authorities with limited resources were unable to effectively pursue all of them.  “We’re going to do everything we can to stop it, realizing that there are more of these rats that come out of their holes than we can stomp on,” Brown said. “This is one of the more egregious wrongs we see committed in society and we are going to fight it.” 

www.youtube.com/watch?v=TX_-nTtNXfU

California Foreclosure Moratorium Guidelines:

ü  The moratorium applies to first mortgages made from 2003 through 2007.

ü  The home loan must be for your principal residence.

ü  The homeowner must have received a notice of default.

ü  The home loan servicer does not have a California loan modification program in place.

ü  Because many homeowners are upside down on their home loans

There is a concern that the 90-day negotiating period will only postpone the inevitable because so far the banks are not reducing the principal.  Read the complete Article from the Loan Modification Outlet.> Loan Modification Plans and California Foreclosure Moratorium

Let’s not forget that Wells Fargo never offered 2-year adjustable mortgages and high risk option ARM’s with the 1% teaser rates that  Chase, WAMU, IndyMac, Countrywide, World Savings and pretty much every other subprime mortgage company offered a years back.

Here is the unsubstantiated comment:  “Knowing that it would probably be unlikely that Wells Fargo could comment publicly on the mortgage issues facing the Kropkowski family, I still asked the company for a response early Monday. This came in Monday night, just after my column deadline:

“During a time of financial hardship, various workout options are explored and may be available to customers.  If a homeowner can’t demonstrate financial ability to afford a loan modification under the investor guidelines, Wells Fargo is unable to extend a loan modification.  Due to customer confidentiality and other privacy considerations, Wells Fargo cannot share specific customer loan information beyond what the customer has chosen to make public.”  Debora Blume, in the Communications Dept. of Wells Fargo Home Mortgage. Original Blog Post >

Understanding mortgage loans can be confusing enough, and now comes a new maze of incentives, eligibility requirements and loan workout options under the recently announced two-pronged federal program to rescue troubled homeowners.  The new federal Making Home Affordable program is aimed at helping homeowners who are current but have little or no equity in their homes by refinancing their loans, and at delinquent or at-risk borrowers by restructuring their home loans.

What happens in a mortgage refinancing or loan modification is contingent on three factors:  The modification rules set for lenders and loan servicers who join the federal program; the homeowner’s circumstances, such as family hardships; And the mortgage lender, investor or loan servicer, who has some leeway and incentives in deciding on changes to the loan.   Article written BY ELLEN YAN

In a recent report, MDA DataQuick said that California home loan defaults declined 7.7 % in the 4^th quarter after the state enacted a law to delay home foreclosures. California homeowners received 75,230 default notices in the fourth quarter, down from 81,550 a year earlier. 4th quarter defaults dropped 20% from the previous three months, according to DataQuick.  Kelly Media Group President, Jason Cardiff commented, “When homeowners are waiting to modify their home loan, most mortgage lenders don’t report loan defaults even if the borrower is behind six months.” Cardiff continued, this means “We need to be extremely cautious when considering foreclosure data and housing reports.”  See the complete California real estate article> Southern California Home Sales up 50% but Most Are Foreclosures.