Monday, January 25, 2010

What do I do if I've been scammed?

As homeowners continue to struggle with house payments… the Center and its network of non-profit Foreclosure Counselors continue to hear about homeowners who have paid companies (or "agents," / "brokers," / "representatives") to have their loan modified with no results.

While it seems as though the average fee is about $2,000 – $3,000, our counselors have encountered homeowners that have spent upwards of $12,000 (see our blog post here) all with little or no results.

For more information about avoiding these scams, the Center has produced a "Consumer Alert" fact sheet that you can view here. Bottom line: no struggling homeowner should have to pay to get help with their mortgage. It’s really that simple.

If you, or someone you know, has become a victim of a loan modification scam, there are a few steps that we encourages you to take:

  1. Speak with one of Minnesota’s non-profit Foreclosure Counselors. They will be able to assess your situation and offer you the kind of help and assistance that the ‘fee-for-service’ organization promised, but couldn’t/didn’t deliver.
  2. Gather as much supporting documentation as possible – name of company and agent/representative you spoke with, company address, details about when you talked to them, and especially: copies of anything you agreed to in writing, receipts of payment (cancelled checks, for example), etc.

    After reviewing your situation and documentation, your Foreclosure Prevention Counselor may decide to refer you to non-profit legal assistance teams for review.  Please note: there have been limited successes to date, especially due to the fact that many of these organizations are located outside of the state of Minnesota. Our legal partners have found that the company or its agents never reply to demands for repayment - they suspect they just sets up shop under another name. However, if the company is local and as homeowner you are willing to pursue further action, they may be able to do more, including actions with the MN Attorney General’s Office and even suing the organization or agent.

  3. File a complaint with the Minnesota Attorney General’s Office. Minnesota’s "Foreclosure Consultant law" was updated last year to include loan modification services, and that law prohibits charging an up-front fee before services are performed. The AG is a central office for compiling complaints and has the most power to act. The AG has a complaint form on their website here.
  4. Use the Minnesota Department of Commerce website to look up whether a company is licensed for mortgage loan origination (Follow the "License Look Up Tool" link on the right-hand side of this page). By law, companies that provide mortgage modification services must be licensed by the state and often times are not. If they are not licensed, the Commerce Department may be able to fine the company and force them to get licensed.
Remember: there is NO NEED to pay for foreclosure-prevention services in Minnesota. There is NOTHING a fee-for-service company can do that our network of Foreclosure Counselors can’t. And more often than not… these fee-for-service companies are SCAMS. Be careful out there!

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