Over the coming weeks, the Center will be highlighting on this blog, and it's web page, a number of posts about the rising number of scams and dangerous programs that are popping up throughout the state and country looking to separate distressed homeowners from their money.
Scam #1: Foreclosure Rescue Scams (Loss Mitigation Agents/Foreclosure Consultants)
In many cases these are the same predatory loan officers and agents that sold Minnesota homeowners a dangerous or unaffordable loan in the last few years, that have rebranded themselves as being able to "help" homeowners arrange a repayment plan or a reduced monthly payment on their existing home mortgage. The 'agent' will charge anywhere from $500 to $5000 dollars or more - promising to make some kind of payment arrangement with the lender. In other cases, the salesperson is working as an agent of "attorneys that specialize in real estate law" - many times located in another state.
In either situation, there are two MAJOR problems working with these kinds of programs:
- EVEN IF the 'agent' or 'specialist' is able to work out some kind of repayment plan with the lender... the service they offer is available FREE OF CHARGE to Minnesota homeowners through the Center's network of foreclosure counselors. In addition... the Center's network of non-profit counselors has MANY additional resources available to homeowners above and beyond what any for-profit 'agent' or attorney can offer. If our network of counselors determines that legal assistance is necesary, they have access to non-profit consumer advocate law firms that can help.
- In MANY cases these companies take desperate homeowners money up-front and do very little to help - and actually make the situation WORSE. In most cases these companies tell consumers to STOP contacting their lender - which is always bad advise - stating that they will handle all conversations with the bank going forward. In addition, they require homeowners to sign a "Power of Attorney" which grants them 'permission' to do just about anything they want with the home. As if that weren't enough... many times these companies take the money up front, and offer NO HELP at all to homeowners, leaving them in a WORSE situation with their lender, and with even LESS money than before.
This situation is becoming so pronounced throughout the country, including Minnesota, that a number of governmental agencies have even put out warnings to distressed homeowners:
- To view President Obama's warning about rescue scams, visit the President's "Financial Stability" page: www.financialstability.gov/makinghomeaffordable/
- To view Attorney General Lori Swanson's warning, visit the Attorney General's website.
What are some of the warning signs of a potentially dangerous foreclosure scam?
- Calls offering you buyback or lease-to-own options
- Offers to provide "Walk-Away" services
- Requests for your social security number
- 'Counseling' that requires fees for services
- Offers for quick and easy fixes.
- Requests to sign binding contracts - including Power of Attorney - from sources other than your mortgage lender or a Center, or HUD-Approved, Foreclosure Counselor.
Home owners can avoid potential foreclosure scams by working with the Minnesota Home Ownership Center’s network of Foreclosure Counselors. The Center and our network of counselors at 24 non-profit partners throughout Minnesota are recognized by the Department of Housing and Urban development (HUD) for their high quality and dedicated service - and their help is absolutely FREE.
To make a plan of action, never pay somebody a lot of money to help you avoid foreclosure and educating yourself is the most important step to take when facing foreclosure.
ReplyDeleteIn that way, your credit rating is maintain and your home is still in your hands.
My organization works with small businesses. As the economy worsens, a number of them are going into foreclosure on their homes and we don't hear about it until late into the process. I have two questions: 1) how can we be more proactive in encouraging our small business clients to contact a home ownership counselor early, and 2) what can we do if we suspect that a client has been the victim of a foreclosure scam?
ReplyDeleteI'll try and answer both questions:
ReplyDelete1. The Center produces marketing materials (http://www.hocmn.org/professionalresources.cfm) that you could use to mail to your constituents/members. You may also want to send out reminders via email or on your website regarding the fact that there IS help available. In addition... you could coordinate with the Center to host an information session for your membership (contact Ed Nelson - ed@hocmn.org) if you'd like to set something up.
2. If you suspect that a client has been the victim of a scam, here's some additional information:
a. Forward them the "Foreclosure Rescue" fact sheet that the Center produces. (Located here: http://www.hocmn.org/Stock/Editor/File/FactSheetAlert_LoanModificationsFees.pdf).
b. Have them contact one of the Center's Foreclosure Counselors for assistance.
c. File a complaint with the Attorney General and the Department of Commerce. Info on filing a complaint is available at both websites.
d. Contact a legal services attorney or a consumer rights attorney. The Foreclosure Counselors may be able to make recommendations.
THANKS!