Our law office continues to receive numerous calls from homeowners who were scammed by so-called ‘loan modification’ companies. Most of the ‘loan modification scammers have companies based in California, Florida, New York and New Jersey. By the time the homeowner figures out the scam, they’ve lost between $700 and $5,000 on average and/or received a notice they are in foreclosure. Some homeowners have had no idea they’ve been scammed until someone comes to their door with documents showing the house was sold at a foreclosure auction and they’re the new owner.
Scammers tell homeowners what they want to believe - the lender is going to give them a loan modification or guarantee a loan modification. Many homeowners later find out the scammer has never talked to or contacted their lender at all! The believing homeowner usually ends up paying an additional fee (usually between $2,000 to $4,000) for a ‘forensic audit’ - also done by the scammer.
As I’ve written before, a forensic audit (or forensic accounting) is tracking and collecting evidence usually to investigate or prosecute a criminal act such as embezzlement or fraud. During our client’s one-hour consult, I scrutinize documents in detail to see if there is any wrongdoing done by the lender. The audit is rarely needed, and there’s no proof an audit would alter or stop a foreclosure.
Last week, The Department of Housing and Urban Development (HUD) filed charges against three California-based home loan modification companies along with nine employees for allegedly violating the Fair Housing Act.
According to HUD, the California companies; The Home Loan Auditors, Century Law Center and SOE Assistance Center schemed to get homeowners, specifically Hispanic homeowners facing foreclosure to pay for home loan audits they never received and for loan modifications that had little or no effect. A U.S. administrative law judge will be hearing the charges, and there is a good chance a wronged-homeowner will ask they be heard in federal district court.
An administrative judge, if ruled in the homeowners favor can award damages, and can also provide other forms of relief. If the case is heard in federal court, the judge can also award punitive damages.
Lenders don’t work with, or negotiate with phony counseling or foreclosure rescue companies. Lenders do work with legitimate attorneys. Some scammers will tell you they’re working with a qualified attorney or paralegal. Do your homework. Get the name of the attorney, check with your state’s “bar” (licensing organization) to ensure that attorney is licensed to practice law in your state. Stay away from any company offering guarantees or making bold statements, promises or is pressuring you.
If you think you’ve been a victim of foreclosure fraud, contact your state’s Attorney General’s office and the Federal Trade Commission.
If you are facing foreclosure, or in need of a loan modification, Gantenbein Law Firm's real estate estate and foreclousre lawyers can help you achieve the best possible solution. Gantenbein Law Firm is located in Denver and serves clients throughout Colorado. For more information, visit our website or call 303-618-2122.
You may also visit our Foreclosure Defense page and Real Estate Law page fpr more information on your real estate and foreclosure issues.