By Brittany Dunn 

Preventloanscams.org was recently launched by HUD in partnership with the Loan Modification Scam Prevention Network, a national coalition of public and private enterprises led by the Lawyers’ Committee for Civil Rights Under Law. The Web site was created to provide homeowners with a single destination to report alleged scammers.

“Homeowners at risk of foreclosure can be easy prey for home loan modification scammers,” said John Trasviña, HUD assistant secretary for fair housing and equal oppportunity.

Trasviña said dishonest individuals often lure vulnerable homeowners into foreclosure rescue scams by making false promises, frequently claiming they can lower mortgage payments or stop the foreclosure process. Instead of receiving help, these troubled homeowners lose time and money, he explained.

Through Preventloanscams.org, complaints filed online are added to a national complaint database and are forwarded to the appropriate law enforcement center for review. In addition, HUD has directed its local fair housing and housing counseling grantees to begin reporting alleged loan modification scams via the Web site.

Before the launch of Preventloanscams.org, federal, state, and local government agencies could not share complaint data with nonprofit organizations. However, the new system allows for better analysis of trends across jurisdictional lines, which HUD says will likely lead to an increase in private enforcement action filings.

The network estimates that this online tool will assist approximately 50,000 homeowners affected by loan modification scams. Clearly, the creation of this national complaint database is a major step in the fight against loan modification scams.

District Attorney Steve Cooley warns Los Angeles County homeowners to be on the alert for foreclosure rescue scams. Many consumers are faced with a mortgage they can no longer afford and are facing foreclosure. Unscrupulous opportunists are profiting from this crisis.  They promise quick results for a fee but actually provide nothing.

Beware of promises involving the payment of substantial amounts of money or the deeding of your home to someone as a way to solve your financial problems.

In reality, these predators may steal your money, your home and your hope.

Help yourself. Call your lender directly to negotiate a loan modification. For foreclosure assistance, seek help from a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD) by calling 1-888-995-HOPE (4673).

For more information or to make a complaint, contact the Los Angeles County Department of Consumer Affairs Real Estate Fraud and Information Program at 1-800- 973-3370.

If you believe you are a victim of a foreclosure scam, call your local law enforcement agency.

To learn more about foreclosure fraud, go to the Los Angeles County District Attorney’s website at:http://da.lacounty.gov/cpd/foreclosure.htm.

To watch a video public service announcement about foreclosure fraud, click here.

McLean, VA – Freddie Mac (NYSE:FRE) today announced it has hired Titanium Solutions, Inc. to meet with delinquent borrowers at their homes and help them supply missing information, documents and complete other actions needed to begin their three month trial payment periods for Home Affordable Modifications under President Obama’s Making Home Affordable program.

Titanium Solutions will target late-paying borrowers with Freddie Mac-owned mortgages who have not returned letters or phone calls sent by their servicers, or who need to provide additional information or documents to launch their three-month Home Affordable Modification trial periods. Titanium will also help those borrowers who have started their Trial periods complete the documentation process to enable them to be converted into final modifications.

“By meeting with our borrowers, one on one, in their homes Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods,”said Ingrid Beckles, Senior Vice President Of Default Asset Management at Freddie Mac. “We believe this can give borrowers seeking Home Affordable Modifications the same type of personalized guidance they may have had when they were buying their home or applying for their mortgage.”

“Through this initiative, Freddie Mac again demonstrates their commitment to helping homeowners in need. We are pleased to work with them to improve contact with at risk homeowners who are in jeopardy of losing their homes to foreclosure, as well as increasing the number of homeowners who receive and are approved for a modification,” said Patrick Carey, Chief Executive Officer at Titanium Solutions, Inc.

Reaching Delinquent Borrowers in their Homes

Titanium Solutions representatives will provide borrowers seeking Home Affordable Modifications with a wide range of support and expertise from reviewing program requirements, to explaining which documents are needed, to securing signatures and walking them through unfamiliar processes.

To minimize potential fraud by imposters, Titanium Solutions representatives will not accept mortgage payments or any other money from borrowers. Representatives will also carry a copy of their servicers’ solicitation letter the borrower initially received. These letters are specially formatted and include unique information about the mortgage loan.

Titanium Solutions, Inc. is the newest piece of Freddie Mac’s multi-pronged effort to help borrowers take advantage of President Obama’s Making Home Affordable program. Freddie Mac has placed program experts at servicers across the country, works one-on-one with borrowers at local events organized by the Treasury Department, and recently hired Home Retention Services, a wholly owned subsidiary of Stewart Lender Services, Inc., to ease backlogs at several servicers by processing applications from eligible delinquent borrowers with Freddie Mac mortgages.

For more information about Freddie Mac efforts to help borrowers and support Making Home Affordable, visit freddiemac.com/avoidforeclosure.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, today identified 16 attorneys who are under investigation for misconduct related to loan modification.

“In my 21 years in attorney discipline, I have not seen a crisis of this magnitude. It is truly unprecedented,” said Interim Chief Trial Counsel Russell Weiner, who is waiving investigation confidentiality in favor of public protection. The waiver, allowed by law, is used only occasionally, but Weiner said the seriousness of the problem demanded a strong reaction by the bar in order to protect consumers. This is the first time the names of more than a few lawyers being investigated have been made public.

“The number of attorneys using their law licenses to essentially take money from unwary but trusting consumers is astounding,” Weiner added. “There are literally thousands of victims who have lost money they could not afford to lose. Under the circumstances, the need for public information and protection is paramount.”   

Those attorneys being named by the State Bar have allegedly taken fees for promised services and then failed to perform those services, communicate with their clients or return the unearned fees, Weiner said. Some attorneys misrepresented the services they could provide. “It appears these attorneys may have significantly harmed their clients who were already facing great financial pressure and the possible loss of their homes.”

About one-quarter  – almost 800 cases –  of the active investigations in the Office of Chief Trial Counsel (OTC) are related to foreclosure complaints. The office has experienced a 58 percent increase in active investigations over 2008 due in large part to the huge increase in complaints against attorneys offering loan modification services. “Our office is aggressively investigating these cases and is working proactively with law enforcement,” said Weiner.

In March of 2009, the State Bar created a special team of investigators and lawyers to handle the growing number of complaints received about attorneys offering loan modification services. OTC found that many of the offending attorneys are associated with firms that use telemarketers or phone banks to sign up clients without regard to the facts of the individual case or whether or not the client can be helped, Weiner said.
In many cases, the attorneys work with untrained non-attorney staff engaging in the unlawful practice of law by offering legal advice to prospective clients. OTC also is investigating the non-attorney staff for possible referral to law enforcement.

In recent months, OTC has obtained the resignation of three attorneys who were offering loan modification services. Those attorneys chose to give up their licenses to practice law rather than face disciplinary charges and possible disbarment. In addition, OTC lawyers are preparing to put some attorneys on inactive status pending the filing of formal disciplinary charges

Weiner warned consumers to take special caution when seeking legal representation related to loan modification. “Consumers should not be comforted by advertisements that claim the attorney is a member of the State Bar of California,” he said, noting that all attorneys practicing in California on a regular basis are members. “Such membership does not mean the attorney has any special knowledge, experience or expertise in the area of loan modification. In fact, it appears that many of the attorneys offering these services have little or no prior experience in the area of loan modification.” 

The following attorneys have received a significant number of complaints related to the loan modification services they were hired to perform. They are entitled to a full and fair hearing on any charges that may be filed in the future. No discipline may be imposed unless and until the State Bar proves allegations of misconduct by clear and convincing evidence.

The State Bar suggests that consumers be wary of attorneys offering loan modification services under any of the following circumstances:

• Advertisements of the office do not expressly identify by name the attorney who is responsible for the business.
• Office staff will not readily identify by name the attorney responsible for oversight of the business.
• The attorney in charge of the office is too busy or not willing to meet personally with prospective clients.
• The firm advises a consumer to stop paying the existing mortgage.
• The business, through its advertisements or claims of its representatives, makes  claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved. 
• The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value.
• The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

There are legitimate loan modification services and ethical attorneys that are providing the promised services for their clients. Two places to start in the search for loan modification assistance are: HUD Housing Counselors, 800-569-4287, http://www.hud.gov/counseling; and HOPE NOW, 888-995-HOPE, http://www.hopenow.com. 

Consumers can also find qualified attorneys through a State Bar-certified lawyer referral service that can be found on the State Bar’s Web site (www.calbar.ca.gov), or by calling the State Bar’s Lawyer Referral Services Directory at 1-866-442-2529 (toll free in California) or 415-538-2250 (from outside California).

Consumers having a problem with the attorney handling their loan modification may contact the State Bar at 1-800-843-9053 or visit the State Bar’s Web site at www.calbar.ca.gov to find a complaint form.

ALAN ZIBEL

The Associated Press

WASHINGTON – The head of the Federal Trade Commission said Thursday the agency is considering banning upfront payments to companies that advertise help for borrowers who are in trouble on their home loans.

Government officials say scammers seeking to take advantage of borrowers in danger of default often charge upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.

“If you are concerned about keeping your home, avoid any company that asks you for a large fee in advance. That is a real red flag,” said Jon Leibowitz, chairman of the FTC. Such upfront fees are already prohibited in 20 states.

His comments came as his agency announced it filed civil charges against two companies, San Diego-based Nations Housing Modification Center and Infinity Group Services of Orange County, Calif.

The government accused both companies of charging homeowners large fees for assistance in working with their lenders, but doing “little or nothing” to actually help borrowers.

Leibowitz said the FTC was also considering restrictions on how mortgage rescue companies can advertise their services. Ads for loan modification companies frequently appear on late-night TV and on billboards in some parts of the country. Nations Housing, for example, mailed homeowners official-looking letters purporting to be from an address on Pennsylvania Avenue in the nation’s capital.

They were designed to trick consumers into thinking that they were participating in a government program, regulators said.

The government has filed charges against 22 companies operating such schemes and say the firms often have names or ads designed to make borrowers think they are using the Obama administration’s efforts to help modify or refinance millions of mortgages.

Authorities emphasized that help is available for free from government-approved housing counselors.

Homeowners can locate free housing counselors at http://www.makinghomeaffordable.gov or by calling (888) 995-HOPE.

On Thursday, 12 state attorneys general met with U.S. Attorney General Eric Holder, Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan to discuss their anti-fraud operations.

“A lot of these scams operate nationwide, from outside our borders,” said Connecticut Attorney General Richard Blumenthal.

Mod Tutor.com has a free resource which basically shows homeowners how to submit their own loan modification request without paying huge fees to a foreclosure “counselor” or a real estate attorney. The site  has videos, a discussion board, an e- book, a state foreclosure summation, lender-specific modification forms and  is much easier to understand than makinghomesaffordable.gov. For more info, go here.

The CA Attorney General’s office has a new website which has info on how to avoid loan modification fraud. I know I have written about this before, but I still get the feeling many homeowners do not know where to go to get the information they need. You can find the site here.  The latest on the AG’s office crackdown on foreclosure “consultants” can be found here.  Please help spread the word so more California homeowners can learn about this site.

The Federal Trade Commission and Attorney General Gerry Brown revealed lawsuits today filed against companies running loan modification scams in Southern California . You can read about it here.  This is good news, but the question remains– How many more of these “operations” will continue to use their advance fee agreements with the CA Dept of Real Estate, and their “attorney affiliates” as a license to steal?  It isn’t a secret anymore that loan modifications are not granted to just anyone because of lender/investor criteria, so why justify up front fees when it is most likely not going to be approved anyway?  What I still don’t understand is why many homeowners will often lose part of the “retainer fee” when the modification is unsuccessful. This “fee” should be put into a trust fund until the modification works. If it doesn’t, they get their money back. There are a few loss mitigation companies who do just that- this should be the standard for all of them.

Los Angeles, California - Attorney General Edmund G. Brown Jr. today sued a foreclosure consultant and an attorney – Paul Noe Jr. and Mitchell Roth – who conned 2,000 desperate homeowners into paying exorbitant fees for “phony lawsuits” to forestall foreclosure proceedings.

These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home’s value.

“Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits,” Brown said. “Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees.”

Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.

He convinced more than 2,000 homeowners to sign “joint venture” agreements with his company, United First, and hire Roth to file suits claiming that the borrower’s loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower’s mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth’s firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner’s debt, the homeowner would be required to pay the company 80 percent of the value of the home.

Brown’s lawsuit contends that Noe, Roth and United First:

• Violated California’s credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
• Inserted unconscionable terms in contracts;
• Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and
• Violated 17500 of the California Business and Professions Code.

Brown’s office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.

Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004. Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm.

VICTIMS:

P.J. – After receiving default notices and conducting unsuccessful negotiations with his lender, P.J. of Panorama City contacted United First and was promised his home could be saved. In November 2008, P.J. signed a contract with United First and hired Roth’s law firm, paying nearly $5,000 in upfront and monthly fees. Even as P.J. was paying United First, Roth did nothing to advance his case, and his lender foreclosed on his home earlier this year.

A.S. – In June 2008, A.S. from La Mesa, Calif. received notices that his mortgage payments were going to increase from $3,700 to over $5,000 per month. A.S. was referred to United First by a member of his church. Representatives of the company assured him that his mortgage debt could be eliminated. A.S. paid over $10,000 to retain Roth’s firm. Shortly after signing a contract, A.S. received foreclosure notices from his lender. He called United First about the notices but was told not to worry and that his case was moving along. In January 2009, A.S. received a notice to come to United First’s office to pick up his file. Roth had abandoned his cases, and the State Bar had shut down the firm.

Tips for Homeowners

DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON’T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON’T transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called “rescuers” use to evict homeowners and steal all or most of the home’s equity.

DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Brown’s Actions to Help Homeowners and Stop Loan Modification Fraud

Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers’ ability to afford loans.

Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.

Shut Down “Foreclosure Freedom” And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.

Broke Up “First Gov” And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.

Ended “Federal Land Grant” Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.

Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.

As we all know, there is currently a 90 day moratorium on foreclosures here in California. Also worth noting, the Attorney General’s office has demanded all  foreclosure rescue and loan modification consultant firms register with the AG by July 1st and post a $100,000 bond. Keep in mind, attorneys are exempt from this action. So why is it that an attorney who did personal injury cases 3 months ago is suddenly more qualified for the task than a legitimate loss mitigation company? Is this the kind of person you want working on your file? What exactly does this measure accomplish? At this time, it is estimated that there will be roughly $500 Billion in mortgage resets in the Alt A, Prime and Option ARM arenas between the last quarter of 2009 through 2012. About 58% of those mortgages are here in California. You can read more about that here. There are a growing number of short sales, and yes, it is spreading to the Westside of Los Angeles. The question many people have is : can we qualify for a loan modification.? We have all heard the TV and radio spots for these companies- What most of these loan mod “consultants”, and even the attorneys will not tell you is that many people will not qualify. For instance, even if the lender is satisfied the homeowner has documented hardship and verified income, whomever is holding the note will ultimately take the action which is in their best interest, which in many cases is to let the property go into foreclosure. Furthermore, more than 50% of loan mods currently are re-defaulting, which just adds more to what is already a hot mess. The truth is, unless the homeowners qualify for a government backed loan mod program, in most cases the best case scenario is that the modification will be good for about 5 years. You can see for yourself who can qualify for Obama’s loan modification program here . Currently, most non-realtor opinions have home values on the westside declining for at least another year. This means even more homeowners will be eventually be underwater, along with more loan mod re-defaults, which inevitably increases housing inventory, which puts downward pressure on prices. In the present climate, with the aforementioned massive defaults looming, for a homeowner who owes more than what the property is worth, it makes more sense in this case to do a short sale and cut your losses. Why? because if you don’t you are potentially chasing bad money with more bad money, or in other words, investing in a non-performing asset, like buying stock in a declining market with no real basis for upside potential. I realize there are no easy solutions here to avoiding foreclosure, but for the homeowner who owes more than what the property is worth, a short sale is a much better alternative than waiting for a bailout, which in many cases is like Waiting For Godot.