More Problems With Loan Modification Firms

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:

• Oceanside, California: Couple brings loan modification fees into question. Warnings cautioning homeowners about paying upfront consultant fees in last-ditch efforts to avoid foreclosure may have been too little, too late for homeowners Ryan Walker and Kelly Hart. “She told us we were perfect candidates,” Hart said. “We met all the qualifications for a modification. They said it would be 30 to 45 days.” That guarantee was never made in writing, however. “Their attorney supposedly had a 99 percent success rate when working with candidates like us,” Walker said. “She sold us a good story.” In October 2008, they paid the $3,495 service fee with a cashier’s check hoping to have some financial relief by the end of the year. In the nearly seven months since, Walker and [Hart] have received about 30 e-mails from Mary Moi, the Better Life modification specialist assigned to their case after they paid the fee, but there has been no change in the status of either of their mortgages.

• Indianapolis, Indiana: Hoosiers falling victim to foreclosure scams. Laura Bailey and her husband lost their jobs and missed mortgage payments. The bank foreclosed and a sheriff's sale notice arrived. Desperate, they called a mortgage foreclosure consultant. "When someone tells you 'for this amount of money we can stop all this,' you think 'great,'" said Bailey. New Hope Modifications took $1,250 of the couple's money, then shut down. The Federal Trade Commission charged the New Jersey company with false advertising. It claimed it was part of the non-profit, government-endorsed mortgage assistance network. New Hope is one of many suspected fraudulent businesses authorities are trying to close. "They are like vultures. They go after people who are down on their luck," said Bailey.

• Phoenix, Arizona: Loan modification scam leaves Phoenix woman facing foreclosure. Not one but two Valley families fell for the same promise, come up with some cash and we'll save your home from foreclosure. Weeks and then months went by and the families still found themselves facing foreclosure. Their mortgages were not modified. That’s when law enforcement got involved and so did 3 On Your Side. In one particular neighborhood alone, two houses back to back both signed up with Jose Chavez. In total, Chavez reportedly collected $8,000 in cashier’s checks. Phoenix police and the FBI got involved and they are now looking in to theft allegations against Jose Chavez.

• Middletown, Pennsylvania: Couple lose home despite ability to pay (One payment was returned, and mortgage service firm refused to negotiate after they got behind). After inadvertently failing to mail a mortgage payment, Richard & Patricia Meredith's mortgage company, Wells Fargo, threatened foreclosure. About the same time, the Merediths got a postcard from a foreclosure rescue company called American Housing Authority in California offering to help. It seemed to be just what they were looking for, Patricia said. American Housing Authority told them to send $4,500 to Wells Fargo, but the money was returned for reasons the Merediths can't explain. American Housing Authority started demanding payments to continue negotiating on behalf of the couple, the Merediths said. They sent the company $1,200 in 2007 but balked when it asked for more, because they hadn't seen results. In February 2008, the Merediths' home was foreclosed on by Litton Loan Servicing in Houston, which services Wells Fargo loans. As for the money and time the couple spent with American Housing Authority, it's not clear what, if anything, the company did for the Merediths. Though the Pennsylvania attorney general's office has had no dealings with American Housing Authority, the company has been sued by the attorneys general in several other states, including Illinois, Ohio and Minnesota. A contact number for American Housing Authority could not be found.