Whenever there is a disaster, there are people more than willing to take advantage of the situation to make a few fast bucks.
And the mortgage meltdown is no exception.
“Homeowners are desperate. They need a modification but can’t figure out the (refinancing) puzzle, which creates an opportunity for scam artists,” Arizona Attorney General Terry Goddard said during a forum for faith-based leaders on how to educate their flocks about loan modification scams.
Where to go for
Foreclosure hotline sponsored by the Arizona Department of Housing:www.azforeclosureprevention.org, or (877) 448-1211 For free guidance by HUD-approved counseling agencies:www.hopenow.com, or (888) 995-HOPE Scam artists who advertise how they can guarantee to save a home, but charge up-front fees, and generally have little, if any success, are an ongoing problem.
“Despite working on this for three years, it’s a problem,” Stacy Proctor, an attorney for the Federal Trade Commission in Los Angeles, told the nearly 100 people at Mountain View Lutheran Church, which hosted the forum Wednesday.
And it doesn’t just happen to “them.” It also can happen to Ahwatukee Foothills residents.
Charles Rust lost his Ahwatukee Foothills home after spending thousands for mortgage refinancing help from companies that took his money but did nothing.
“We ended up losing our house in October. We had lived in that house for 15 years,” Rust said.
Michael Sheldon, who teaches personal finance classes at Mountain View, said Ahwatukee Foothills homeowners can be hit worse than homeowners in poorer areas.
“They took home equity loans out and used the money to buy stuff,” said Sheldon, who lives in Lakewood. Then, when home values dropped, and income for many Ahwatukee Foothills residents dried up, they found themselves upside down and carrying more debt then they could afford.
In one class of 15 families with whom he worked with on personal finances, the debt load was $750,000, and that didn’t include mortgages.
But there is free, real help, available for people who are facing a mortgage crisis.
The U.S. Department of Housing and Urban Development has certified housing counseling agencies to help work with lenders and homeowners.
“Not everyone will have a positive outcome,” warned Patricia Garcia Duarte, the president of Neighborhood Housing Services of Phoenix, a certified counseling service that helps homeowners prevent foreclosure.
But with a HUD-certified counseling agency, if there is a possibility to modify a loan and save a home, they will work to find it. And since they are free, the homeowner doesn’t sink further into debt as happens with many of the scam artists that have set up shop in Arizona, Duarte said.
For more information, visit www.HopeNow.com or call 888 995-4673.
Red flags of mortgage scams
If you’re looking for foreclosure prevention help, avoid any business that:
• Guarantees to stop the foreclosure process – no matter what your circumstances.
• Instructs you not to contact your lender, lawyer, or credit or housing counselor.
• Collects a fee before providing you with any services.
• Accepts payment only by cashier’s check or wire transfer.
• Encourages you to lease your home so you can buy it back over time.
• Tells you to make your mortgage payments directly to it, rather than your lender.
• Tells you to transfer your property deed or title to it.
• Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.
• Offers to fill out paperwork for you.
• Pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.
If you’re having trouble paying your mortgage or you have received a foreclosure notice, contact your lender immediately.
Source: Federal Trade Commission, www.ftc.gov.
5 tips for avoiding foreclosure scams
Work only with a nonprofit, HUD-approved counselor.
If you are looking for help to prevent foreclosure, be sure the counseling agency is on the Department of Housing and Urban Development’s list of approved agencies. Visit HUD’s Web site (www.hud.gov) for an easily searchable list of HUD-approved housing counseling agencies, or call 877-HUD-1515 (877-483-1515) for more information. If you are approached by foreclosure counselors — by mail, phone, or in person — make sure the counseling agency is HUD-approved before you do business with them.
Don’t pay an arm and a leg.
You should not have to pay hundreds — or thousands — of dollars. Most HUD-approved housing counselors provide no-cost counseling services and many more provide low-cost counseling. Do not agree to work with a counselor who collects a fee before providing you with any services or who accepts payment only by cashier’s check or wire transfer. In general, do not pay money to anyone unless you know exactly what services you will receive.
Be wary of “guarantees.”
A reputable counselor will not guarantee to stop the foreclosure process, no matter what your circumstances. Working with a legitimate counselor can certainly increase your chances of keeping your home — but be wary of people who promise a sure thing. Again, get the details of your transaction, along with any promises, in writing first.
Know what you are signing — and be sure you sign it.
Don’t let a counselor pressure you to sign paperwork you haven’t had a chance to read through carefully or that you don’t understand. Don’t sign any blank forms or let “the counselor” fill out forms for you. Be sure to talk with an attorney before signing anything that transfers the title of your home to another party.
If it sounds too good to be true, it probably is.
If you feel you may be the target or victim of foreclosure fraud, trust your instincts and seek help. For tips on spotting scam artists, visit the Federal Trade Commission’s Web page (www.ftc.gov) on foreclosure rescue scams. Report suspicious schemes to your state and local consumer protection agencies, which you can find on the Federal Citizen Information Center’s Consumer Action Web site (www.consumeraction.gov).
Source: The Federal Reserve Board, www.federalreserve.gov.