Desperate homeowners can prove to be easy pickings thanks to opportunities created by programs designed to help
David Kramer understands why so many homeowners fall prey to mortgage foreclosure scams.
They’re scared. They’re desperate. And the sweet siren song of financial assistance is just too tempting to ignore.
But they would be so much better off if they did.
“Some homeowners are not very sophisticated and in a panic when they are facing foreclosure,” says Kramer, an assistant attorney general with the New Mexico Consumer Protection Office’s Homeownership Preservation Program. “They stress over ‘I should do something and call someone to take care of this.'”
Unfortunately, rather than reaching out to those who actually might be able to help – his office, a housing counselor or the lender itself – many turn to those more interested in helping themselves.
And the steady improvement in the housing market hasn’t put much of a dent in this mortgage foreclosure racket – either in New Mexico or across the nation.
“I don’t see any of these scammers going away or the work tailing off,” Kramer told the Journal . “They tend to morph in response to enforcement efforts. We still see quite a bit of mortgage assistance fraud.”
Ironically, the more that federal and state governments move to institute programs to help homeowners on the brink of foreclosure, the more opportunities they create for would-be scammers.
That’s what happened after the federal government introduced the Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP) several years ago. The same was true when the federal government announced a landmark $25 billion settlement with five of the nation’s largest mortgage providers in February 2012.
In the first quarter of 2012, for example, the number of reported mortgage scams jumped 60 percent when compared to the same period a year earlier, according to the Homeownership Preservation Foundation (www.995hope.org), a nonprofit organization based in Minneapolis that provides free counseling to distressed homeowners.
And little has changed since that time.
Josh Fuhrman, senior vice president of business development and community relations for the organization, says the percentage of calls related to mortgage foreclosure scams has doubled between 2010 and today.
What’s particularly sad, he says, is many of the people who contact his foundation already have been fleeced out of a sizeable amount of money, yet still remain at risk of losing their homes.
Fuhrman advises distressed homeowners to take advantage of free services such as those offered by his foundation, local U.S. Department of Housing and Urban Development offices, or even talking to family and friends before making what could be an ill-fated decision.
“The reality is desperate people do desperate things – and scammers know that,” he says.
Searching for victims
So how do these scam artists find their unsuspecting victims?
Easy. Some check out public foreclosure notices in newspapers or online, or scour through paper filings in government offices. Others place enticing ads in newspapers, on radio, TV or the Web. Still others go so far as to place fliers or business cards on your front door.
Regardless of the method, the sales pitches are remarkably similar:
“Stop foreclosure now!”
“Get a loan modification!”
“Over 90% of our customers get results.”
“100% money back guarantee.” And while the specific offers can come in various shapes and sizes – fake loan modification assistance, rent-to-buy schemes, bait-and-switch deals or forensic audits – they all tend to have one thing in common.
They are far more interested in relieving you of upfront fees, valuable personal information or even your home than in helping you to keep it.
Fortunately, there are some common threads to help homeowners gauge whether foreclosure assistance offers are on the up and up.
The state Consumer Protection Division cautions to beware of any business solicitation that:
• “Guarantees” a loan modification or other assistance to save your home from foreclosure.
• Instructs you not to contact your lender, an attorney or a housing counselor.
• Requests up-front fees even before beginning to provide any assistance, especially if the offer is from an out-of-state attorney.
• Demands payment only by cashier’s check or wire.
• Urges you to lease your home with the promise of buying it back at some point in the future.
• Suggests you redirect your mortgage payments away from your original lender.
• Or pressures you to sign documents before you’ve had the opportunity to read or understand them.
Still, knowing what not to do is only half the battle, according to consumer advocates.
“You have to do something,” says Rebecca Branch, deputy director of the state Consumer Protection Division. “You can’t just ignore the issue … I’m saddened to see how many people bury their heads in the sand.”
What to do?
If you need help in staving off foreclosure of your home, contact the state’s Homeownership Preservation Program (www.nmag.gov) at 1-855-664-6630.
Additional assistance is available from Keep Your Home New Mexico (www.keepyourhomenewmexico.org), a consortium of state agencies that provides free assistance to homeowners.
And if you believe you are the target of a mortgage foreclosure scam, don’t hesitate to contact the state Office of the Attorney General at 505-222-9100.
Nick Pappas is assistant business editor at the Albuquerque Journal. Contact him at firstname.lastname@example.org or 505-823-3847 if you are aware of what sounds like a scam in the area. To report a scam to law enforcement, contact the New Mexico Consumer Protection Division toll-free at 1-800-678-1508.