Vianna Engel was determined to hold on to her home. “If I lose my property, my elderly mother loses her home, too,” Engel this week explained to a staff member at the Attorney General’s Office. Her mom’s single-wide mobile home sits on Engel’s property in Rochester. “She took care of me and I’m not going to let this happen to her.”
But Engel fell behind on her mortgage payments after having major surgery and facing over $5000 in out-of-pocket expenses. She received a dreaded foreclosure notice. During the crisis, which Engel calls the worst thing she’s ever experienced, she also lost $2500 to a common scam: an offer to help modify her loan for an upfront fee.
“Offers of mortgage help for a fee exploit people in their darkest hours,” said Washington State Attorney General Rob McKenna, whose office again today warned about these scams. “They convince people to pay a fee for something they can receive for free.”
McKenna warns consumers to be on the lookout for television and radio advertisements, flyers, mailings, e-mails and phone calls from those offering mortgage help for a fee. Scammers comb foreclosure filings, which are public records, for new victims. Often the offers come from companies with names that sound like law firms. Sometimes they offer “loan audits” in which they promise to examine your loan for legal claims you can use to stop a foreclosure. However, these audits are often inaccurate and are never enough to stop a foreclosure. McKenna adds that such audits are no substitute for obtaining legal advice from a licensed attorney.
Representatives working at the Attorney General’s Consumer Resource Center are reporting an uptick in complaints about these scams, which they call “third party loan modification offers.” The Washington State Bar Association is also seeing an increase in the number of inquiries about firms or individuals, many from out of state, that claim to offer help with loan modifications. A common theme is that the homeowner loses $1500 to $3000 and no modification is granted.
Engel paid the $2500—in installments, since that’s all she could afford— to the Home Credit Law Center, which she had seen advertised on television. When she told the company that it would be tough for her to pay them, she says they implied it would be easier than she thought since she didn’t have to pay her mortgage for a few months. The company did not obtain a loan modification and her lender ended up tacking $10,000 in missed payments on to the principal of her loan. Fortunately, when Engel gave up working with the Home Credit Law Center, she was able to work out an arrangement with her bank and keep her home.
Instead of falling for third-party loan modification offers, McKenna suggests a much simpler idea: call the Washington Homeownership Information Hotline at 1-877-894-HOME. The hotline, funded in part by settlements reached between the Attorney General’s Office and mortgage lenders, along with the State Department of Financial Institutions, connects borrowers to free counselors and, in some cases, pro-bono attorneys. He also requests that those who have been victimized by a loan modification scam file a complaint with his office. Information about how to file a complaint may be found atwww.atg.wa.gov.