Postcard: Independent Foreclosure Review

Did you receive a postcard about the Independent Foreclosure Review?


The Minnesota Homeownership Center and members of the Homeownership Advisors Network have participated in a mailing to thousands of Minnesota families that may have been involved in a foreclosure or tried to work on a loan modification in 2009 or 2010, to let them know that they may be eligible for financial compensation or another remedy.


Here's a copy of the postcards that have been mailed:

Front of Postcard - Click to Enlarge

Back of Postcard - Click to Enlarge

While the Center doesn't have exact numbers... we do know that homeowners, or former homeowners, requesting a formal review of their bank's foreclosure procedures have been far less than the regulators anticipated.  In a nutshell: families that may be eligible for some sort of payment may be leaving money on the table.


WHAT IS THE INDEPENDENT FORECLOSURE REVIEW (IFR)?
Federal banking regulators (the Office of the Comptroller of the Currency, simply known as the OCC, the Office of Thrift Supervision and the Board of Governors of the Federal Reserve System have created a process by which homeowners may request an independent review of their foreclosure process if they meet two major criteria:

1. They were part of a foreclosure action on their primary residence any time from January 1, 2009 to December 31, 2010;
2. Their loan was serviced by one of the 14 participating mortgage servicers.  (See list below).

If the review finds that financial injury occurred because of the servicer’s errors, misrepresentations or other deficiencies in the foreclosure process, the customer may receive compensation or other remedy.

NOTE:  "Foreclosure Action" can mean anything from receiving a notice of intent to foreclose (even if your payments were brought up to date) all the way through having lost the home at a foreclosure or Sheriff's sale.  Even homeowners whose loan entered any point of the foreclosure process in 2009 or 2010... and are still delinquent, but the Sheriff's sale has not yet taken place, are eligible.

IS IFR A SCAM?
NO.  However it is important to remember that NO ONE should charge you a fee to help 'facilitate' or 'improve your odds' of receiving compensation.  NEVER PAY FOR HELP.


I'VE ALREADY FILED A COMPLAINT WITH MY LENDER... IS THAT ENOUGH?
No.  Your bank or servicer may have their own internal review process.  However, if your mortgage loan meets the initial eligibility criteria, you should submit a Request for Review Form to ensure your foreclosure action is included in the Independent Foreclosure Review process.


WHAT BANKS/SERVICERS ARE PARTICIPATING?
Your mortgage must have been serviced by one of the 14 participating mortgage lenders/servicers or their affiliates:

• America’s Servicing Co.
• Aurora Loan Services
• BAC Home Loans Servicing
• Bank of America
• Beneficial
• Chase
• Citibank
• CitiFinancial
• CitiMortgage
• Countrywide
• EMC
• EverBank/EverHome
• Mortgage Company
• Financial Freedom
• GMAC Mortgage
• HFC
• HSBC
• IndyMac Mortgage Services
• MetLife Bank
• National City Mortgage
• PNC Mortgage
• Sovereign Bank
• SunTrust Mortgage
• U.S. Bank
• Wachovia Mortgage
• Washington Mutual (WaMu)
• Wells Fargo Bank, N.A.
• Wilshire Credit Corporation

I'M INTERESTED IN LEARNING MORE... WHAT DO I DO?


Step One:  Call the Minnesota Homeownership Center: 651-659-9336
or Toll Free: 866-462-6466 with any questions.


Step Two:  Visit the Independent Foreclosure Review website:

   www.IndependentForeclosureReview.com


As always... if you're struggling with your mortgage - or know someone who is - the Minnesota Homeownership Center serves as a FREE resource to Minnesota homeowners.  Call us today with questions about the Independent Foreclosure Review... or other programs, resources and assistance available to prevent foreclosure, TODAY. 

Foreclosure Scams Are Still An Issue

BE CAREFUL OUT THERE!

On April 6, 2011, a coalition of fair housing non-profit organizations released their findings of a year-long undercover investigation of 80 "loan modification" (foreclosure rescue) companies, which reveals that the industry is rife with unethical, corrupt and even illegal practices.  These practices include over-promising & under-delivering, charging fees for services that are available free from nonprofit organizations and even advising clients on how to commit acts of fraud against their lenders.

The report - which has a GREAT title: “Have I Got a Deal for You! An Undercover Investigation of Mortgage Loan Modification Scams,” was released by The National Fair Housing Alliance, the Connecticut Fair Housing Center, Housing Opportunities Made Equal of Virginia, Inc., and the Miami Valley Fair Housing Center.  It documents some of the tactics mortgage modification scammers use to take money from struggling homeowners.

Here are just a few of the results of the report: 

• 55% of the scammers required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of distressed homeowners, such as reviewing loan documents;
• 43% guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations;
• 24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders;
• 16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans;
• 12% discouraged homeowners from seeking free help from government-approved housing counseling agencies;
• 8% encouraged homeowners to provide fraudulent information to their lenders.

The full report is available here.

None of these findings surprise us here at the MN Home Ownership Center.  We hear from homeowners repeatedly that have spent money, lost time and been taken advantage of by less-than-scrupulous mortgage "rescue" operations.  If you are struggling with your mortgage, THERE'S NO NEED TO PAY FOR HELP.  There is a network of FREE, non-biased housing counseling agencies that can assist.  To find your local non-profit foreclosure prevention counselor, click here.

For more information on what's being done in Minnesota to fight foreclosure rescue scams, visit the Center's "Look Before You Leap" website.  You can help us fight these scammers in Minnesota!

More Warnings Against Scams

The Huffington post has a great story up about the dangers that struggling homeowners face when they don't know where to turn for help, or when they grow frustrated trying to work with their lender: they become prey to scam artists.

The piece is here.

The Minnesota Home Ownership Center has additional information on avoiding scams on the "Look Before You Leap" (Avoiding Foreclosure Scams) website, here.

Here are some additional tips on how to avoid foreclosure rescue scams:

• Don't fall for the lies that the scammers use to lure in homeowners: claims that they can save your credit, promise to find a buyer for your property or offers of free rent or gifts.
• Don't EVER be pressured to sign a contract... especially if you don't understand something.  If something sounds too good to be true, it probably is.  Speak with an attorney or a certified foreclosure prevention specialist who can help review documents with you.
• Don't EVER send your monthly mortgage payment to a third party or a mortgage 'rescue' company, even if they promise to forward those payments on, or hold them in a special account.
• Don't rely on verbal agreements.  Get everything in writing and keep copies of all documents, ESPECIALLY the ones you sign.  This is good advise, but many of the homeowners highlighted in the HuffPo article had 'contracts' and those contracts were worth less than the paper they were printed on, so be very careful.
• Don't sign any form or contract with blank spaces or blank lines. 

Basically, we can sum up these scams in one line: no one that is struggling to pay their mortgage should have to pay to get help!

There is a network of FREE foreclosure prevention counselors available in Minnesota that are ready, willing and able to sit down with you to discuss your options for avoiding foreclosure.  To connect with a foreclosure prevention counselor, click here.  To learn more about the options available to Minnesota residents to avoid foreclosure, click here.

Stopping Foreclosure Scams: New FTC Rules Take Effect Today

Beginning today, homeowners in Minnesota and nationwide are benefiting from the Federal Trade Commission (FTC)'s new consumer protection rules aimed at stopping foreclosure rescue scams. The Mortgage Assistance Relief Services Rule (MARS) bans companies from making false promises in their marketing and, beginning Jan. 31, prohibiting them from charging any up-front fees for their services.

We are all well aware that these terrible scams are robbing homeowners of their savings, their home, or sometimes both. This new Rule will further our fight to end foreclosure rescue scams in Minnesota by giving the FTC the tools needed to crack down on scamming companies across the country - companies that are targeting homeowners in our state.

In addition, MARS requires mortgage modification companies to disclose key information to consumers, including:

• They must explicitly state that they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
• The lender may not agree to change the consumer’s loan; and
• If companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating as a result of this action.

For additional information about the new rules, and what it means for Minnesota homeowners, see our full press release, here.

While the new FTC Rule is an enormous consumer protection victory, homeowners still must be armed with information to recognize these scams and to protect their homes. That's why the Minnesota Home Ownership Center has created a brochure-size, two-sided consumer education piece for you to share with your networks and consumers. It equips homeowners with simple questions to ask themselves when considering outside help for a mortgage modification, and it directs them to www.LookBeforeYouLeap.org to connect with a counselor in their community.

Order Look Before You Leap Consumer Handouts Today!

Help us help Minnesota homeowners - commit to displaying this piece today! The consumer handout is the perfect size for brochure and information racks, tabling events, or including in utility bills or other mailings. We have produced materials in both English and Spanish. And, we'll provide you copies free of charge!  Visit the campaign website: www.LookBeforeYouLeap.org to download and submit an order form.

Look Before You Leap

On Tuesday, June 29th, The Minnesota Home Ownership Center will be launching “Look Before You Leap”, a statewide public education campaign seeking to raise public awareness about the booming foreclosure rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connect struggling home owners with the Center’s network of foreclosure counselors.

While the Center will lead the effort, we are working in partnership with NeighborWorks America and other national organizations (FDIC, Federal Trade Commission, AARP and others) and we currently have the support of over 55 Minnesota-based agencies, organizations and municipalities as well!

To readers of the Center's blog, we're asking that you help spread the word about the campaign:

a. If you're on Facebook, LIKE us ('Fan Page'):

http://www.facebook.com/LookBeforeYouLeap

• Here you can share ideas about promoting the campaign and
• Share the stories YOU'RE hearing about rescue scams

b. Visit the campaign website: www.LookBeforeYouLeap.org and please consider subscribing to the campaign's newsletters to keep on top of our efforts to stop foreclosure rescue scams in Minnesota.

c. Consider having your organization PARTNER with us. Partnership in the campaign is simple:

We’ll recognize your as an advocate of home owners on www.LookBeforeYouLeap.org and in our print materials, and we’ll keep you up to date with the latest campaign efforts and events.

In return, we ask that you include newsletter articles or other tools we provide in your internal communications whenever possible, and that you work with us to let your members (and their clients) know about mortgage rescue scams in Minnesota.

We’d also love to have you join us at the campaign launch event on Tuesday, June 29th @ 10:00 here at the Center (outside lot, just north of our building), followed by a brief reception in our office.

For a Google Map to our office, click here.

If you have additional questions about the campaign... or would like to learn more about becoming a partner, please contact Ed Nelson at the MN Home Ownership Center: ed[at]hocmn.org

Deed-For-Lease to avoid foreclosure?

Is it possible to stop being a homeowner… and become a renter of your EXISTING home? As strange as it sounds, this might just be possible with Fannie Mae’s “Deed for Lease” Program. This may allow you to be able to stay in your current property for awhile and avoid the disruption of moving your family.

The current program offers a lease of NO MORE than 12 months, at current market rental rates. If current rental rates are about the same as, or even higher than your current monthly mortgage, this program probably won’t help. The program is ONLY available for properties with mortgages backed by Fannie Mae. To see if Fannie Mae is the investor (backs) your mortgage, click here.

While the program has been around since November 2009… many people didn’t qualify becuase they had junior liens (second or third liens) on their property. Given the changes announced at the beginning of April with the new HAFA program… even homeowners with junior liens may now qualify for the ‘Deed for Lease’ program.

There are actually TWO steps that homeowners with Fannie Mae loans must ‘qualify’ for in order to be able to participate in the program.

1. First, you must sign over the deed (title) of your home in what is known as ‘Deed-in-Lieu’ of foreclosure. You have to qualify (apply) for this with your current lender… you can’t just sign over your deed and mail it back to them.

2. If your lender agrees to a Deed-in-Lieu, then you must sign-up for the “Deed-for-lease” program. There is a $75.00 per unit lease application fee as well.

The ‘Deed-For-Lease’ program is one of the few options available to avoid foreclosure for investor-owned properties… as the investor/owner can agree to a deed-in-lieu of foreclosure and their tenants can apply for the Deed-for-Lease program.

For your property to be eligible:

• The property must be livable (qualify for a certificate of occupancy according to CURRENT local rules, codes). Repairs might be necessary to qualify or to bring the property into compliance – the program does allow for 30 days to bring it into compliance.
• The property cannot be the focus (or participate in) any corporate, government or community neighborhood stabilization plan.
• The property will be inspected, and an independent inspection report agrees that you have kept the property in good condition.
• The market rental income must cover ongoing maintenance and management costs.
• If the property is part of a homeowner's association, it must allow rental properties.

For you or your tenant to be eligible:

• The market-rate rent on the property must be less than 31% of your gross income (unemployment income counts).
• The number of occupants must be in compliance with local laws and homeowner association rules.
• Occupants signing the lease must agree to a credit review and all occupants over age 18 must have a background check.
• No sign or reports of illegal activities conducted at the property.
• The property will be use for a personal residence.

 As long as your property is eligible, you will be assigned to a property manager who will do the inspection and manage the property once you are accepted into the program.

The property manager will meet with you within 10 days of filing your application to the “Deed for Lease” program. At the meeting you will need to fill out a formal application and pay a $75 processing fee for the application. If it's a multi-unit property, the $75 fee will be collected for each unit. The property manager will then conduct an inspection of the property to be sure it meets local codes and regulations and that the property has been adequately maintained (see above).

The advantage to this type of program is that it allows you time to start rebuilding your credit score and allows you to free up additional funds to start paying down other debt. Currently, however, the maximum lease time is 12 months… you may only be delaying the inevitable move.

Remember... you can't just sign your Deed and mail it back to the bank.  There are LOTS of steps that must be taken.  Also.. BE CAREFUL. There are LOTS of for-profit and "Foreclosure Rescue" scam companies that would love to have you sign over your deed, and will leave you without a home and without recourse.

Are you interested in learning more about the Deed-For-Lease program... or other ways to avoid or prevent foreclosure in Minnesota? Contact your local FREE (non-profit) Housing Counseling agency today to explore your options.

FTC Proposes Limits on For-Profit Loan Rescue Companies

Following the lead of states like Minnesota… the Federal Trade Commission (FTC) is proposing a new rule that would prohibit for-profit loan modification companies from charging an upfront fee for services. Companies would also have to disclose to consumers that they are for-profit, total fees they will charge, clearly state that they’re not associated with the government or the lender, and the fact that there’s no guarantee that the lender will agree to a loan modification.  Many of these proposals are already in effect in Minnesota.

There is a Federal Register published and the public comment period closes on March 29.  You can view the Federal Register, here. 

For more details, visit http://www.ftc.gov/opa/2010/02/mars.shtm

The Center has repeatedly warned homeowners about exercising caution when working with ANYONE in a foreclosure situation.  We've even created a fact sheet (available here) to help homeowners. 

To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.

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!

Partner Organization, NeDA, highlighted in Twin Cities Daily Planet

One of the Center's partner organizations, the Neighborhood Development Alliance (NeDA) has been highlighted in an article published on August 10th in the Twin Cities Daily Planet entitled: "Flor's story: Fighting foreclosure in North Minneapolis".

NeDA has been working with a struggling homeowner, Flor Garcia, since May in order to help her understand her rights and responsibilities with her mortgage, as well as mediating on her behalf with her lender, Countrywide, to attempt to get her a loan modification that will be affordable for her.

Garcia, who learned about the foreclosure prevention services of NeDA through the Jewish Community Action, has become an advocate for other struggling Latino families... to let THEM know about the resources available through NeDA:

Garcia is working with her lender, Countrywide Financial (which has recently merged with Bank of America) to lower her payments and get her home out of foreclosure, and has also begun to volunteer with Jewish Community Action to help other Latino community members understand the help and resources that are available to them.

If you, or someone you know, is struggling to make their monthly mortgage payments... HELP IS AVAILABLE! Services are available in English, Spanish, Hmong and Somali. Don't delay, waiting limits your options. Find your local foreclosure prevention counselor, and other resources, here.

FTC Shuts Down Scam Loan Modification Companies

The Minnesota Home Ownership Center has warned - and will continue to warn - Minnesota consumers about the number of for-profit loan modification companies that are beginning to make their appearance in Minnesota.

NOW, we've received notice that the Federal Trade Commission (FTC) has shut down a number of Loan Modification Companies that were taking advantage of homeowners throughout the country, by falsely claiming to be a part of the HOPE NOW Alliance.

The complete story can be found at the FTC's website, here.

THESE ARE ONLY A FEW OF THE DANGEROUS ORGANIZATIONS LOOKING TO SEPERATE HOMEOWNERS FROM THEIR HARD-EARNED MONEY.

The Minnesota Department of Commerce requires that anyone who engages in the work of loan modifications... attorneys, loan officers, lenders or private individuals... have a residential mortgage originator license pursuant to Minnesota Statutes Chapter 58.

According to the state of Minnesota... individuals offering or negotiating loan modifications are indirectly acting as mortgage originators. Additional information can be found here.

SO… if ANYONE offers to assist you with a loan modification, PLEASE check their license status with the MN Attorney General’s office FIRST.

BUT, WHY PAY FOR SOMETHING, when BETTER services are available free of charge? If you think a loan modification may help keep you in your home, please contact one of our FREE non-profit foreclosure prevention specialists for help.

Report on Mortgage Fraud

Chris Snowbeck from the Pioneer Press has written an article about the Mortgage Asset Research Institute's (MARI) 11th annual report on Mortgage Fraud to the Mortgage Banker's Association.

The article can be viewed here.

The Complete MARI report can be viewed in PDF format here.

The report describes the three most prevelant mortgage-related fraud schemes that have emerged in the last year. Here at the Center, we've already written extensively about the #1 new scam: Foreclosure Rescues. (Here, Here and Here).

If you're having difficulty with your house payment - or think you might have some difficulty in the future - contact a FREE Foreclosure Specialist today... waiting limits your options.

Disclosure: Ed Nelson from the Center was quoted in the Pioneer Press article.

Foreclosure Rescue Scams

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:

1. 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.
2. 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:

1. To view President Obama's warning about rescue scams, visit the President's "Financial Stability" page: www.financialstability.gov/makinghomeaffordable/
2. 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.