Facing a historic economic mess and spikes in foreclosures, the state has finalized an agreement with six mortgage service companies to help struggling Marylanders keep their homes.
The plan to be announced today will establish a "cooling off period" for people who start to face foreclosure, halting all foreclosure actions and accrual of fees and penalties for 60 days. The companies that have agreed to cooperate with Gov. Martin O'Malley's plan are HSBC, GMAC ResCap, Litton Loan Servicing, Ocwen, Citigroup and AmeriNational Community Services.
Almost 25 percent of mortgage loans in the state will be covered by the agreement, according to the state Department of Labor, Licensing and Regulation.
Other parts of the plan will have those companies designate certain employees as "Team Maryland" to act as a point of contact for Maryland homeowners working through the state's Foreclosure Prevention Assistance Network.
Under the agreement, the companies also will create internal policies and incentives encouraging modification of loans rather than foreclosures.
The agreement comes at a time when foreclosures are rising in Anne Arundel County.
Foreclosure filings have jumped from 161 in September to 240 in October, said Lucinda Jones, the supervisor of civil records at the Circuit Court of Anne Arundel. She said the trend will probably continue this fall and filings could reach 270 or higher this month.
"We got a huge amount in yesterday," Ms. Jones said. "I do believe there is going to be a steady increase for the next couple of months."
The deal ends months of negotiations that began in February, when Mr. O'Malley criticized the loan industry for its lack of customer service and giving troubled homeowners busy signals as often as real assistance.
"The state of Maryland is committed to providing relief and offering solutions to homeowners at risk of foreclosure," he said in a release. "As a state, we have an obligation to protect our middle class families, particularly during this time of economic uncertainty."
Over the past year, Mr. O'Malley has been aggressive in changing the foreclosure process in Maryland as the implosion of the subprime and housing markets reverberate across the nation.
The governor created the "Bridge to HOPE"
Loan program, which provides small loans at zero interest to homeowners having difficulty with payments, and launched an advertising campaign to make sure troubled Marylanders don't wait to take action.
During the last General Assembly session, a host of housing reforms were passed to give people more time to keep their homes, including an extension of the foreclosure process to 150 days.
State officials encouraged Maryland residents facing foreclosure to call 1-877-462-7555 or visit www.MDHOPE.org.
"Maryland has been at the forefront of creating policies and reforms to combat the foreclosure crisis that has swept the nation," Thomas Perez, the secretary of the Department of Labor, Licensing and Regulation, said in a release. "These agreements are a critical component of our comprehensive efforts to provide homeowners with the resources and assistance they need to remain in their homes."
Some observers said the state's new agreement will help ease the situation here.
The plan is part of a "phenomenal" effort by Mr. O'Malley, said Sally Snowberger, the director of homeownership for the Housing Commission of Anne Arundel County.
"We've been working on this for a long time," she said. "People are not being foreclosed on as quickly had he not done this."
Tim O'Malley, senior vice president of sales and marketing at loan servicer AmeriNational Community Services, said his company is proud to be a part of the new agreement. Mr. O'Malley is not related to the governor.
"I think it goes a long way to put some procedures in place to help. It is the right thing to do," he said. "It is another example of the governor rolling up his sleeves and getting involved." (By LIAM FARRELL and KATIE ARCIERI, www.hometownannapolis.com)
Showing posts with label foreclosure rescues. Show all posts
Showing posts with label foreclosure rescues. Show all posts
Thursday, November 13, 2008
Monday, August 27, 2007
Foreclosure fallout: Rescue scams
Scammers are taking advantage of mortgage holders at their most vulnerable - when they're about to lose their homes.
NEW YORK (CNNMoney.com) -- Jennifer Falke and her family had been in their Columbus, Ohio, home for nearly 12 years when they hit a rough patch in 2006. Falke was out of work and fell behind on the mortgage.
Falke said a flood of mailings and flyers then arrived at her door promising help from foreclosure rescue companies claiming to act as an intermediary between her and her lender to keep her from losing her home.
According to Falke, the company she contacted, Foreclosure Assistance Solutions (FAS), simply took her money and did nothing for her. And by delaying a workout with her lender, it made getting back on track harder and more expensive.
"I called the company, thinking it was the best thing I could do," she said. "They told me they could help. But one of the first things they said was, 'Don't call your mortgage company. If you do they'll tack on fees.'"
For a $1,200 payment, according to Falke, FAS claimed it would handle everything, including calls to the lender, but she charges it did nothing.
"Every time I got enough together to pay off the arrears, they would say the amount had increased." Falke received an income tax refund that she wanted to put toward a payment. But according to her, FAS said her mortgage company said it wasn't enough.
"Then they stopped answering my calls. I would leave a message every day," Falke said. "One day, they told me, 'We're dropping your case' and hung up on me."
Only then did she call her lender. Falke found out the payoff was less than what FAS had told her - $2,600 instead of $3,500. And then she learned that the bank had dealt with many cases like hers.
"To prey on people at one of the most vulnerable points in their lives is despicable," said Ohio Attorney General Mark Dann, who filed suit earlier this month against six foreclosure rescue companies, including FAS, who he claims snared Ohio residents in their webs.
FAS did not return a phone message asking for comment.
As foreclosure rates rise, evidence from other parts of the country indicates the number of rescue scams may be increasing. According to Alison Preszler, a spokeswoman for the Council of Better Business Bureaus, the BBB for Clearwater, Florida, received 508 complaints about local foreclosure rescue companies in the past three years with 322 coming just within the last 12 months.
Charlotte, North Carolina's BBB office reported last year that two foreclosure rescue companies were operating; today the count is 15 and six have already had legal actions taken against them. Twenty-one new companies began operations this year in Cleveland.
According to Dann, the most common form of foreclosure rescue scam in Ohio is like the one Falke claims was used on her. A scammer takes an up-front fee, usually $1,000 or more, to solve the victim's foreclosure problems, and then does little or nothing, pocketing the money.
Dann said victims are often low-income minorities, the elderly or immigrants in poor neighborhoods, but anyone can be targeted.
The most vulnerable members of society often make the easiest marks. A client of Jessica Attie of South Brooklyn Legal Services, was a mentally ill woman with a $60,000 mortgage balance that carried an interest rate of more than 10 percent. She was falling behind on payments, had few other resources and wanted to reduce her payments.
Attie said a scam artist convinced her client to sign over her title while he cleared up the arrears. She could rent the home for six months, and then he would sell it back to her. Instead, according to Attie, the scammer resold the house and absconded with more than $400,000.
Michael Sichenzia knows mortgage rescue scams from the inside out; in 2002, he was convicted and served hard time for mortgage fraud at the Attica Correctional Facility in New York State. Today he's an investigator for the Deerfield Beach, Florida law firm, Glinn Somera & Silva and chief operating officer of Dynamic Consulting Services, specializing in financial fraud.
According to Sichenzia, the most common foreclosure rescue scam has always been "equity stripping."
"The scammer promises to save the home by taking title," he said, "renting it to the owner and selling it back sometime later. Instead, he strips the equity by charging excessive fees, doing phony renovations and not making the mortgage payments."
Sometimes the home owner is fully aware that the title is changing hands, counting on the promise to be able to redeem it later. But other times the scammer tricks the owner.
"The signing over of title is buried in an avalanche of paperwork or in the language of the contracts," said Sichenzia.
Duane Legate, who runs Housebuyernetwork.com, which arranges short sales for homeowners in trouble and also offers foreclosure prevention advice, said, "There's only a handful of legitimate companies out there, ones that really do try to help clients. The rest are just looking for a quick payoff."
According to Legate, the scammers are multiplying so rapidly that there's even a company that sells foreclosure rescue Web sites, complete with testimonials from smiling, satisfied clients.
Here are some of the tactics that scammers are known to use:
* Saturation marketing: They learn of mortgage delinquencies through published reports and proceed to bombard the owners with phone calls, flyers and posters.
* Exploiting trust: Scammers build trust by acting sympathetic and solicitous; many owners can't believe they would lie to their faces.
* Isolating owners: Scammers assure victims that they'll handle everything. They tell them not to call their lenders nor seek legal advice.
* Outright fraud: Scammers have homeowners sign blank papers and fill them in afterward or they sneak the paperwork through without telling victims what they're signing.
* Affinity marketing: Especially among minorities and sometimes evangelical church congregations, a scammer builds trust based on a common ethnicity or religion.
According to Dann, you should never trust anyone who has contacted you, unsolicited, offering to help. "There are no boundaries to entry for any entrepreneurial criminal to get into these scams."
The best thing to do is to call your lender and try to work out a plan. If in doubt, get in touch with your state attorney general's office. It can put you in touch with a Housing and Urban Development-approved free credit counseling service that will do you a lot more good than fee-based rescue services.
Jennifer Falke was able to work out a settlement with her bank. She's back to work and current with her mortgage payments, but she is out the $1,200 she paid to FAS.
"The ingenuity of people who would rather cheat than work hard is unending," said Dann. (http://money.cnn.com)
NEW YORK (CNNMoney.com) -- Jennifer Falke and her family had been in their Columbus, Ohio, home for nearly 12 years when they hit a rough patch in 2006. Falke was out of work and fell behind on the mortgage.
Falke said a flood of mailings and flyers then arrived at her door promising help from foreclosure rescue companies claiming to act as an intermediary between her and her lender to keep her from losing her home.
According to Falke, the company she contacted, Foreclosure Assistance Solutions (FAS), simply took her money and did nothing for her. And by delaying a workout with her lender, it made getting back on track harder and more expensive.
"I called the company, thinking it was the best thing I could do," she said. "They told me they could help. But one of the first things they said was, 'Don't call your mortgage company. If you do they'll tack on fees.'"
For a $1,200 payment, according to Falke, FAS claimed it would handle everything, including calls to the lender, but she charges it did nothing.
"Every time I got enough together to pay off the arrears, they would say the amount had increased." Falke received an income tax refund that she wanted to put toward a payment. But according to her, FAS said her mortgage company said it wasn't enough.
"Then they stopped answering my calls. I would leave a message every day," Falke said. "One day, they told me, 'We're dropping your case' and hung up on me."
Only then did she call her lender. Falke found out the payoff was less than what FAS had told her - $2,600 instead of $3,500. And then she learned that the bank had dealt with many cases like hers.
"To prey on people at one of the most vulnerable points in their lives is despicable," said Ohio Attorney General Mark Dann, who filed suit earlier this month against six foreclosure rescue companies, including FAS, who he claims snared Ohio residents in their webs.
FAS did not return a phone message asking for comment.
As foreclosure rates rise, evidence from other parts of the country indicates the number of rescue scams may be increasing. According to Alison Preszler, a spokeswoman for the Council of Better Business Bureaus, the BBB for Clearwater, Florida, received 508 complaints about local foreclosure rescue companies in the past three years with 322 coming just within the last 12 months.
Charlotte, North Carolina's BBB office reported last year that two foreclosure rescue companies were operating; today the count is 15 and six have already had legal actions taken against them. Twenty-one new companies began operations this year in Cleveland.
According to Dann, the most common form of foreclosure rescue scam in Ohio is like the one Falke claims was used on her. A scammer takes an up-front fee, usually $1,000 or more, to solve the victim's foreclosure problems, and then does little or nothing, pocketing the money.
Dann said victims are often low-income minorities, the elderly or immigrants in poor neighborhoods, but anyone can be targeted.
The most vulnerable members of society often make the easiest marks. A client of Jessica Attie of South Brooklyn Legal Services, was a mentally ill woman with a $60,000 mortgage balance that carried an interest rate of more than 10 percent. She was falling behind on payments, had few other resources and wanted to reduce her payments.
Attie said a scam artist convinced her client to sign over her title while he cleared up the arrears. She could rent the home for six months, and then he would sell it back to her. Instead, according to Attie, the scammer resold the house and absconded with more than $400,000.
Michael Sichenzia knows mortgage rescue scams from the inside out; in 2002, he was convicted and served hard time for mortgage fraud at the Attica Correctional Facility in New York State. Today he's an investigator for the Deerfield Beach, Florida law firm, Glinn Somera & Silva and chief operating officer of Dynamic Consulting Services, specializing in financial fraud.
According to Sichenzia, the most common foreclosure rescue scam has always been "equity stripping."
"The scammer promises to save the home by taking title," he said, "renting it to the owner and selling it back sometime later. Instead, he strips the equity by charging excessive fees, doing phony renovations and not making the mortgage payments."
Sometimes the home owner is fully aware that the title is changing hands, counting on the promise to be able to redeem it later. But other times the scammer tricks the owner.
"The signing over of title is buried in an avalanche of paperwork or in the language of the contracts," said Sichenzia.
Duane Legate, who runs Housebuyernetwork.com, which arranges short sales for homeowners in trouble and also offers foreclosure prevention advice, said, "There's only a handful of legitimate companies out there, ones that really do try to help clients. The rest are just looking for a quick payoff."
According to Legate, the scammers are multiplying so rapidly that there's even a company that sells foreclosure rescue Web sites, complete with testimonials from smiling, satisfied clients.
Here are some of the tactics that scammers are known to use:
* Saturation marketing: They learn of mortgage delinquencies through published reports and proceed to bombard the owners with phone calls, flyers and posters.
* Exploiting trust: Scammers build trust by acting sympathetic and solicitous; many owners can't believe they would lie to their faces.
* Isolating owners: Scammers assure victims that they'll handle everything. They tell them not to call their lenders nor seek legal advice.
* Outright fraud: Scammers have homeowners sign blank papers and fill them in afterward or they sneak the paperwork through without telling victims what they're signing.
* Affinity marketing: Especially among minorities and sometimes evangelical church congregations, a scammer builds trust based on a common ethnicity or religion.
According to Dann, you should never trust anyone who has contacted you, unsolicited, offering to help. "There are no boundaries to entry for any entrepreneurial criminal to get into these scams."
The best thing to do is to call your lender and try to work out a plan. If in doubt, get in touch with your state attorney general's office. It can put you in touch with a Housing and Urban Development-approved free credit counseling service that will do you a lot more good than fee-based rescue services.
Jennifer Falke was able to work out a settlement with her bank. She's back to work and current with her mortgage payments, but she is out the $1,200 she paid to FAS.
"The ingenuity of people who would rather cheat than work hard is unending," said Dann. (http://money.cnn.com)
Monday, August 6, 2007
Program to stave off foreclosures
Homeowners fearful of losing their homes because of looming defaults and foreclosures could get help through a new state initiative.
Called Homeowners Preserving Equity, the HOPE program offers a commitment of $100 million in private capital to help about 500 homeowners to refinance and switch adjustable-rate mortgages to fixed-rate mortgages.
The state also plans to use $10 million from the state's mortgage insurance program as an incentive to encourage lenders to provide another $200 million to refinance another 1,000 homeowners.
The goal is to prevent an expected wave of foreclosures due to the recent proliferation of "exotic" loans which include adjustable rate, balloon payment and negative amortization loans.
"The HOPE initiative is an innovative package of foreclosure prevention measures, combining refinancing, mortgage insurance, incentives and homeownership counseling to make sure Maryland families can preserve the equity they have built up in their homes," said Ray Skinner, secretary of the state Department of Housing and Community Development, in a statement after a June 13 press conference in Dundalk.
"It is a proactive approach to address rising foreclosure in Maryland due to sub-prime loans before it becomes a crisis," he said. "We're working to protect Marylanders' greatest asset -- their homes."
The state Department of Housing and Community Development has approved more than 40 lenders to participate in the program, including several with branches or headquarters in Baltimore County.
Included are American Home Mortgage Corp., BB&T, Bradford Bank, Capital Mortgage Finance Corp., Carrollton Bank, Chesapeake Bank of Maryland, Chevy Chase Bank, Citizens Trust Financial Group, Equitable Trust Mortgage Corp., First Equity Mortgage, First Home Mortgage, First Preference Mortgage Corp., M&T Bank and Metrocities Mortgage.
Refinancing is not the only feature of the program.
The Maryland Affordable Housing Trust, administered by the Department of Housing and Community Development, is offering $1 million in competitive grants to nonprofits that provide counseling services to homebuyers.
The one-year awards cannot exceed $100,000 per organization.
In addition, Gov. Martin O'Malley has created a task force to analyze homeownership data and also possibly recommend changes in foreclosure procedures. The task force will report to O'Malley in October before the 2008 General Assembly session begins in January.
The secretaries of the Department of Housing and Community Development and the Department of Labor, Licensing and Regulation will head the task force, which will also include representatives from the mortgage industry, state agencies and housing advocates.
As of June 21, officials had not picked the members.
For more information about the HOPE program, call 1-877-462-7555 or go to www.dhcd.state.md.us.
For complaints about lending practices, call the Department of Labor, Licensing and Regulation at 888-784-0136. (Arbutus Times)
Called Homeowners Preserving Equity, the HOPE program offers a commitment of $100 million in private capital to help about 500 homeowners to refinance and switch adjustable-rate mortgages to fixed-rate mortgages.
The state also plans to use $10 million from the state's mortgage insurance program as an incentive to encourage lenders to provide another $200 million to refinance another 1,000 homeowners.
The goal is to prevent an expected wave of foreclosures due to the recent proliferation of "exotic" loans which include adjustable rate, balloon payment and negative amortization loans.
"The HOPE initiative is an innovative package of foreclosure prevention measures, combining refinancing, mortgage insurance, incentives and homeownership counseling to make sure Maryland families can preserve the equity they have built up in their homes," said Ray Skinner, secretary of the state Department of Housing and Community Development, in a statement after a June 13 press conference in Dundalk.
"It is a proactive approach to address rising foreclosure in Maryland due to sub-prime loans before it becomes a crisis," he said. "We're working to protect Marylanders' greatest asset -- their homes."
The state Department of Housing and Community Development has approved more than 40 lenders to participate in the program, including several with branches or headquarters in Baltimore County.
Included are American Home Mortgage Corp., BB&T, Bradford Bank, Capital Mortgage Finance Corp., Carrollton Bank, Chesapeake Bank of Maryland, Chevy Chase Bank, Citizens Trust Financial Group, Equitable Trust Mortgage Corp., First Equity Mortgage, First Home Mortgage, First Preference Mortgage Corp., M&T Bank and Metrocities Mortgage.
Refinancing is not the only feature of the program.
The Maryland Affordable Housing Trust, administered by the Department of Housing and Community Development, is offering $1 million in competitive grants to nonprofits that provide counseling services to homebuyers.
The one-year awards cannot exceed $100,000 per organization.
In addition, Gov. Martin O'Malley has created a task force to analyze homeownership data and also possibly recommend changes in foreclosure procedures. The task force will report to O'Malley in October before the 2008 General Assembly session begins in January.
The secretaries of the Department of Housing and Community Development and the Department of Labor, Licensing and Regulation will head the task force, which will also include representatives from the mortgage industry, state agencies and housing advocates.
As of June 21, officials had not picked the members.
For more information about the HOPE program, call 1-877-462-7555 or go to www.dhcd.state.md.us.
For complaints about lending practices, call the Department of Labor, Licensing and Regulation at 888-784-0136. (Arbutus Times)
Tuesday, July 17, 2007
Victims Of A Foreclosure "Rescue"
New data released Thursday shows that so far this year, there have been a total of 925,986 foreclosures filing nationwide — an increase of 56 percent from last year. But homeowners in distress could face a double whammy: A growing scam is exploiting people who are in foreclosure in a way that leaves them with nothing. Chief investigative correspondent Armen Keteyian shows how the scam works.
Annie Stephens, a 70-year-old grandmother, has lived in her Atlanta home for 40 years.
"I just don't feel like I belong anyplace else," Stephens said.
But after suffering a stroke, she found herself unable to work — and unable to pay her bills.
"Once you get behind, it's hard to catch up. Hard," Stephens said.
Within days of foreclosure, Stephens was overwhelmed with ads promising instant relief, an easy way out.
They proved anything but. She says a con artist claiming he'd help refinance her home instead stole it, then stripped away tens of thousands of dollars in equity.
"They're just no-good scamming vultures," Stephens said.
It's known as "foreclosure rescue" but a CBS News investigation has uncovered an unending trail of victims across the country.
As the number of foreclosures soars to record levels — up nearly 90 percent from this time last year — so does mortgage fraud. CBS News has learned the FBI currently has more than 1,100 cases pending; in 2003 that number was just 436.
Sources say the Metropolitan Money Store in Maryland was one of them.
When Keteyian knocked on the door there, it was apparent the place had been shut down.
"We have helped stop over 250 foreclosures and have refinanced thousands of homes," the company's radio ad says.
A major class action law suit now charges the Metropolitan Money Store of being "the single largest mortgage scam in Maryland history ... an elaborate scheme to dupe" more than 400 homeowners "of millions of dollars in lost equity."
State investigators describe the scheme as a classic come-on: a desperate homeowner buried in debt and facing foreclosure is convinced to transfer the deed of their home to a third-party investor with the promise of getting it back. Instead, the company sucks the equity out of the house, leaving the original owner in desperate straits.
One group says they were victims of the Maryland scheme.
"It’s an empty feeling. It feels like a bottomless pit," a member of the group told Keteyian
"Do you feel like you were cheated?" Keteyian asked.
"Absolutely. Out of our home and more," one said.
"They took the equity and make the credit worse than it was before," another explained.
"I think this is one most outrageous scams in the United States at this time," said Elizabeth Renuart of the National Consumer Law Center.
Renuart says such shady deals are skyrocketing as the mortgage market implodes. "Financial distress is the weakness that they exploit because people are so concerned about losing their homes they'll do almost anything to save them," she said.
Only seven states specifically regulate foreclosure rescues; only one, Massachusetts, makes it illegal.
In Maryland, CBS News wanted to talk to the people who allegedly ran the scheme.
Despite repeated attempts, CBS News was unable to reach Joy Jackson Fordham or her husband, Kurt Fordham, who is also implicated in the scheme. The only trace of them were photos of their $800,000 wedding last year. It was an over-the-top, Hollywood-style affair at which they gave away cash, a Porsche and — in a final insult to folks like those CBS News interviewed — a house.
"What?" one of the victims said.
Could it have been one of their houses?
"That was our wedding!" one woman said. "We didn’t get invited." (CBS News)
Annie Stephens, a 70-year-old grandmother, has lived in her Atlanta home for 40 years.
"I just don't feel like I belong anyplace else," Stephens said.
But after suffering a stroke, she found herself unable to work — and unable to pay her bills.
"Once you get behind, it's hard to catch up. Hard," Stephens said.
Within days of foreclosure, Stephens was overwhelmed with ads promising instant relief, an easy way out.
They proved anything but. She says a con artist claiming he'd help refinance her home instead stole it, then stripped away tens of thousands of dollars in equity.
"They're just no-good scamming vultures," Stephens said.
It's known as "foreclosure rescue" but a CBS News investigation has uncovered an unending trail of victims across the country.
As the number of foreclosures soars to record levels — up nearly 90 percent from this time last year — so does mortgage fraud. CBS News has learned the FBI currently has more than 1,100 cases pending; in 2003 that number was just 436.
Sources say the Metropolitan Money Store in Maryland was one of them.
When Keteyian knocked on the door there, it was apparent the place had been shut down.
"We have helped stop over 250 foreclosures and have refinanced thousands of homes," the company's radio ad says.
A major class action law suit now charges the Metropolitan Money Store of being "the single largest mortgage scam in Maryland history ... an elaborate scheme to dupe" more than 400 homeowners "of millions of dollars in lost equity."
State investigators describe the scheme as a classic come-on: a desperate homeowner buried in debt and facing foreclosure is convinced to transfer the deed of their home to a third-party investor with the promise of getting it back. Instead, the company sucks the equity out of the house, leaving the original owner in desperate straits.
One group says they were victims of the Maryland scheme.
"It’s an empty feeling. It feels like a bottomless pit," a member of the group told Keteyian
"Do you feel like you were cheated?" Keteyian asked.
"Absolutely. Out of our home and more," one said.
"They took the equity and make the credit worse than it was before," another explained.
"I think this is one most outrageous scams in the United States at this time," said Elizabeth Renuart of the National Consumer Law Center.
Renuart says such shady deals are skyrocketing as the mortgage market implodes. "Financial distress is the weakness that they exploit because people are so concerned about losing their homes they'll do almost anything to save them," she said.
Only seven states specifically regulate foreclosure rescues; only one, Massachusetts, makes it illegal.
In Maryland, CBS News wanted to talk to the people who allegedly ran the scheme.
Despite repeated attempts, CBS News was unable to reach Joy Jackson Fordham or her husband, Kurt Fordham, who is also implicated in the scheme. The only trace of them were photos of their $800,000 wedding last year. It was an over-the-top, Hollywood-style affair at which they gave away cash, a Porsche and — in a final insult to folks like those CBS News interviewed — a house.
"What?" one of the victims said.
Could it have been one of their houses?
"That was our wedding!" one woman said. "We didn’t get invited." (CBS News)
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