photo courtesy of d70focus
Here I go again...
With everything that's going on lately, I find myself reading more blogs than ever to see what's happening. I was over at Ken Cook's blog, reading "FALSE Info Flying Around About First Time Tax Credit as Down Payment" and came across his latest post. I thought it was great food for thought for everyone involved in the industry and might just help a few consumers who might be feeling the pinch and getting the calls from these mortgage modification companies.
Consumers - I understand the fear and confusion that comes with being near or in foreclosure. To reveal more than I like to about my personal life, I've been there. I've received the letters, the phone calls, and sat and cried looking at my bank statement vs. my mortgage payment book. It's not fun. It's life or death in many ways. No one wants to lose their home and when it all starts, it can be so frustrating that it's easy to just shut down and stop caring or fall for one of the many scams out there. Don't think for a second that everyone calling you is your best friend and there to help. (So that the story is complete, I sold the house and made a whopping profit on it - I got lucky to be in a hot real estate market at the time and was able to prevent any real problems.)
Of course, that flies in the face of much of what we as Realtors® say. "We are here to help." "We want to help you avoid foreclosure." I know a lot of agents who mean it when they say it. Does that mean all of them do? Unfortunately not. There will always be some out there that aren't who they say they are. I wish there was an easy litmus test for you to figure it out. My advice, get to know them. Your own gut instincts will prove better than any sort of measurable data.
Realtors® - What more can I say than what Ken has already said? We need to learn to sniff out fraud in all its forms before it ever gets to the stage where we are implicit in it. It's easy enough to get caught up in something without even realizing it. With everyone looking to us to provide solutions and everyone calling us to offer them, we're surrounded by choices. And each choice we make affects more than just us. It affects us, our clients, the title companies, lenders, inspectors, appraisers, the industry as a whole - it's not just a simple, "Oops I made a mistake."
How many phone calls have I had over the last 12 months from "mortgage modification companies" promising thousands of dollars to me if would have my loan officers refer to them people who could not refinance but were in trouble. I said no, every time. Sometimes I had some laughable conversations with the people calling. Why did I not want to get involved?
(A) I'm a lender and have my own business I need to focus on. (B) Because I knew better and I knew this would be a headline in the very near future:
"Federal and State Agencies Crack Down on Mortgage Modification and Foreclosure Rescue Scams"
Right, your company isn't a scam. I know because that's what you've told me when you called me.
So what is the litmus test for a scam?
71 companies are using "deceptive ad practices" and are being sued or are under investigation
22 companies gave the impression they were associated with a Federal Agency (such as HUD) they are shut down and may be facing Federal criminal charges.
100's of companies charge upfront fees and are under investigation
Dozens of companies advertise a false success ratio and are being sued or are under investigation
Who is being investigated? Everyone from the originator to the mid-level employees and the company principles. If the originator made false statements, even as a result of training or information provided by the company, they can be held accountable under the law.
You can bet when activity like this is discovered by attorneys they are going to source out any people who feel they were harmed or slighted and create a class for a class action suit. Who can be named in the suit as defendants? All those same people from originators to company owners.
So, for all you loan officers and real estate agents out there who allied yourself with one of these companies (and the investigation list is growing daily) you may want to re-think your alliance, ask yourself if your company or you made any false statements, took money in advance, failed to deliver on guarantees or promises, and anyone has applied but not been issued a modification but you still made money.
Attorneys are able to take modifications as a case. They are allowed to charge a retainer fee. The only attorney I ever referred clients to asked for a $500 retainer fee which HE RETURNED TO THE CLIENT if the modification did not go through. There are a lot of modification companies out there who are owned and run by attorneys. That alone would never make them legit. How many attorneys are disbarred or sent to prison every year just for real estate fraud? Investment fraud? Insurance fraud?
Reader, if you are facing foreclosure call 1-866-HOPENOW or your local HUD office if you have already contacted your lender and they are not working with you. DO NOT STOP when the little hourly paid operator who answers the phone at your servicer says, "no". They do not have the authority to say anything else. The company hopes you get off the phone and find some way to fulfill your covenant to repay the loan you promised you would - that's why the first few people you talk to say "NO".
I will also post something about scamming from the other side, dead beat losers who just refuse to repay their mortgage even though they have made a life covenant with the lender to do so. But that's for another time.