Fighting Loan Modification Scams

In Los Angeles, two thirds of the families facing foreclosure who walk through the doors of our HUD-approved housing counseling agencies have been scammed by so-called mortgage modification consultants. These consultants promise the world to vulnerable homeowners desperate to stay in their homes, charge advanced fees as high as $5,000 and then take the money and run.

Today, I took a big step in increasing the resources that homeowners need in order to combat loan scams and foreclosure fraud. I announced the start of NeighborWorks America's national campaign against loan modification scams. I stood with Eileen Fitzgerald, Chief Operating Officer of NeighborWorks America, to deliver this simple message to Angelenos and the rest of country:

1. You don't need to pay for a loan modification.
2. If you are facing foreclosure, there are HUD-approved housing counseling agencies ready and able to assist you FOR FREE.
3. If a deal sounds too good to be true, it is!

I was honored that NeighborWorks America chose Los Angeles to launch this valuable campaign. Over the past two and a half years, more than 28,000 Angelenos have fallen victim to foreclosure. That's 28,000 friends and neighbors who lost their homes and their stake in the American dream.

Over the past year, we have worked tirelessly to get the message out about the dangers of loan scams to our residents. In fact, in this crisis, we were the first city in the country to ban mortgage modification consultants from charging advanced fees.

It's high time that elected officials, non-profit organizations, and banks work together to shut the door on loan scams and foreclosure fraud once and for all.

As they say, forewarned is forearmed. By giving our homeowners credible information and directing them to reliable resources, we can beat these scammers! To report a scam or to spot a scam, homeowners should go to the NeighborWorks campaign website, or call 1-888-995-HOPE.

 

Follow Antonio Villaraigosa on Twitter: www.twitter.com/villaraigosa

Comments

[workoutmods]

This is a shame, I worked in the mitigation department and the same third party companies was calling in to help customers and most didn't know anything about mortgage or a loan modification. The mortgage company doesn't really care about the customers, the only thing that they care about is collecting the past due money. I had gotten in problem @ work many times, because my talk time was too high from helping people. They want you to move on to the next customer quick. That is one reason why I left.

[S1m0n]

Now you know what tele-scammers keep calling the same sucker lists. These folks got ripped off at least twice on the same mortgage.

[NHGranite]

I worked for a loan modification company, they were legit, and it was free to homeowners. However, the banks refused to help in any significant way. Most of the people I worked with had medical bills or had lost a job, or both. $200 to300 off a month for 3 years would have kept families in their homes, and the bank could have extended the mortgage to cover the losses. $50 is the amount I saw, and that did nothing.

These banks must be making money off foreclosures in a way I don't quite understand. Yes, I know they get most of their interest up front in an amortized loan. And there is PMI insurance that must kick in. Do they also get to write it off differently than if they helped the homeowners catch up on the mortgage?

That HOPE line really has good people, and they are very helpful, I agree.

[pagebike]

Banks immediately sell their loans to Fannie Mae. They cash out the mortgage. That's how they made money. If the house forecloses, it doesn't matter to them really, because the government already bought the loan and the homeowner's payments are just monthly profit for the bank. When all else fails, as it did the last couple of years, the federal government comes in an underwrites the banks, to protect the "system" against property owners or the poor smucks.

[William50]

A simple across the country way to increase spending, start jobs and destroy the scams is this. By presidential order all interest rates are cut in half and all principal on all loans and the value of the home is cut by thirty three percent across the USA and in the hardest hit areas by fifty percent. The banks, countries and money markets that have the loans will accept this as a needed measure to jump start the American economy. One half to three quarters is better then nothing at all. This will also stop the dollar slide against other currencies.

I understand that this is political death because the owners of the political parties want that American dollar. I am for America and Americans first. The owners of the loans can try to get the protection from the insurance agencies but be warned, we will not buy them out again.

For home owners it means a few hundred dollars monthly that you will have that is not being spent on interest. You will begin purchasing , which will stimulate the economy. Just remember buy American, if you can't find American start a company and produce it!
middleamerican2010
Casey