By Lewis Smith and Frank Demarais
If you are in mortgage trouble and looking for help, beware of the “Silver Tongued Devil” looking to take your last dollar. Scam artists prey upon homeowners who fall behind on their mortgage payments. We all too often receive calls from distraught homeowners seeking help in a difficult mortgage payment situation only to learn that they have already spent and lost thousands of dollars trying to obtain promised help which was not delivered. Recently a woman told us how she had paid $3,000 up-front to an out-of-town firm which on one day did not return her calls and on the next she found they had disconnected their phones.
“If someone offers to negotiate a loan modification for you or to stop or delay foreclosure for a fee…watch out for warning signs of a scam…” according to the US Office of the Comptroller of the Currency on April 21, 2009. Senate Majority Leader Harry Reid stated April that “While we’re working to help the millions of desperate homeowners who need to modify their mortgages, countless swindlers are working to take advantage of them.” On March 5, 2009, MarketWatch quoted Maryland’s Labor Secretary Tom Perez as saying: “Scam artists are eager to take advantage of homeowners trying to modify their loans and they will be on the prowl for vulnerable homeowners seeking assistance through the new federal programs.”
Hearing promises that your home mortgage problems can be easily solved, how your credit card debts can be greatly and easily reduced, how your loan can be refinanced or modified to lower your payments and how your home can be saved from foreclosure can be sweet music to the ears of homeowners struggling to keep a roof over their heads.
Take Action at the First Hint of Mortgage Payment Difficulty
At the first sign of upcoming mortgage payment problems, consider all aspects of your situation and all possible solutions and outcomes. First, call your lender and keep calling until you reach a representative to discuss your mortgage situation and possible courses of action. Second, consider options such as taking on a second job, cutting back on expenses, selling your home and renting, and the need to prepare yourself for the worst case outcome of letting your home go to foreclosure if your lender can’t provide relief. Third, meet as soon as possible with a HUD-approved housing counselor for honest and expert help in understanding the best options. But looking at the total picture and all possibilities can be very, very difficult for homeowners to do. Some simply refuse to consider and talk about all of their possible outcomes. But sometimes there is nothing borrowers can do to save their home. One homeowner we recently counseled absolutely refused to consider the possibility of selling, moving or losing her home, even though her home’s value was well below her mortgage debt, her income had dropped significantly, and her credit rating had fallen to a very low score. She vigorously complained to us: “You are giving me no encouragement whatsoever. You may cause me to go out and do something drastic!”
Sources of Expert and Free Housing, Mortgage and Family Budget Counseling
The best housing and mortgage expertise in America is free! There is no evidence that paying anyone, including an attorney, for such counseling will serve you better than what is available from highly reputable providers for free. First, call the HOPE Hotline to talk with a housing counselor approved by the US Department of Housing and Urban Development (HUD). The HOPE Hotline at 888 995-HOPE (4673), which is open 24 hours per day and 7 days a week and is provided by the Homeownership Preservation Foundation. Second, call for an in-person appointment with one of the many HUD-approved housing counselors who work in nonprofit community organizations in every state and large community.
It may take time to get an in-person appointment at a nonprofit housing counseling agency. See the list below. These counselors will review with you in detail your family budget, and suggest ways you might reduce expenses and increase your household’s income. Be persistent. These counselors are currently swamped. But paying a for-profit firm making large promises and enticing emergency appointments may only lead you into deeper trouble.
The Warning Signs in the “Sales Pitches” of Those Who Will Take Advantage of Homeowners
“Help is just a phone call away. Your emergency consultation is free. We are a nonprofit organization with your best interests at heart.” Legitimate nonprofit housing counseling agencies don’t solicit homeowners for appointments with calls like this. You need to call them. Many scammers work through the legal shell of a nonprofit organization.
“We are foreclosure rescue specialists and can help you save your home.” Fortunately, the Council of the District of Columbia passed a 2008 law explicitly making many of the so-called foreclosure rescue specialist activities illegal. Many foreclosure rescue scam perpetrators are now making other promises for up-front fees such as “Even if a foreclosure sale of your home has been completed, we may be able to get your house back.” “Pay us $3,000 and we guarantee we will save your home.” “Stop paying your mortgage.” “If your lender calls, don’t talk with him.” But no one is likely to fulfill such promises or make the advice wise. Advice to not make mortgage payments or to not talk to your lender is ridiculous. “We are affiliated with and approved by the government and can obtain a refinance or mortgage modification for you.” Coming from fee-based counselors this is a false claim and an outcome they cannot fulfill. “File for bankruptcy and save your home.” Bankruptcy can only delay foreclosure for a few months but not stop it.
How to Protect Yourself from Scammers and How to Take the Right Action Steps
First, take action on any signs of future mortgage trouble. Second, advise your lender that you may have mortgage payment difficulty and explore options such as a forbearance, a refinance, or a modification. Third, be alert to scam artists and fraudsters and absolutely avoid them. Fourth, talk with a HUD-approved housing counselor to review your mortgage payment situation, how you can reduce expenses and increase household income, and explore help from your lender and government programs.
Remember this warning of what just one scammer could do, with thanks to singer Kris Kristofferson: “Hiding intentions of evil, under the smile of a saint…that silver tongued devil just slipped from the shadows and smilingly stole (your dollars) away.”
For more detailed program information on refinances or modifications, go to financialstability.gov. Homeowners should explore opportunities and eligibility under the refinance program by contacting Fannie Mae at (800) 732-6643 or fanniemae.com/homeaffordable) or Freddie Mac at (800) 373-3343 or freddiemac.com/avoidforeclosure. Homeowners can explore the modification program by calling their lender or servicer, or the national HOPE Hotline at 888 995-4673, or by contacting one of this area’s HUD-approved housing counseling agencies as follows:
Housing Counseling Services, 2410 17th Street, NW, (202) 667-7006; Latino Economic Development Corporation, 2316 18th Street, NW, (202) 588-5102; Lydia’s House, 3939 South Capitol Street, SW, (202) 373-1050; Marshall Heights Community Development Organization, 3939 Benning Road, NE, (202) 396-1200; or University Legal Services, 220 I Street, NE, (202) 547-4747 and at 3220 Pennsylvania Avenue, SE #4, (202) 581-0600. The DC Housing Finance Agency may be reached at (202) 777-1600.
Lewis Smith and Frank Demarais work at Manna Mortgage Corp., the District of Columbia’s only nonprofit mortgage company, located at 828 Evarts Street, NE, an affiliate of the Manna, Inc. organization. Phone: (202) 832-1845 or Email: lsmith@mannadc.org or fdemarais@mannadc.org.
This was previously published in the Capital Community News as part of the series on the Keys to Home Ownership.
DISCLAIMER: The information and views presented in this column are those of the authors and do not reflect the views of DISB.