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Numerous news stories, former customer accounts, and former employee interviews will be presented in our evaluation of each of these companies.
Our hope is that by being aware of specific ways that criminals scam their clients, our customers will be more successful in avoiding these scams and, ultimately, stop foreclosure.
Watch this space for our upcoming scam evaluations, which should start appearing in a few weeks, and will ramp up during the new year.
Pointless mitigation services
Many scam artists have found that the best way to take advantage of homeowners is to provide them with services that they would be better off doing themselves. A company calling themselves “loss mitigation experts” or “hardship program specialists” will never provide foreclosure victims with a service that they can not do on their own. Furthermore, the lender would much rather speak with the homeowners personally, rather than a loss mitigation company. It is the obligation of the homeowner to take responsibility for their loan and send money to pay the mortgage; the lender will not prefer to speak with anyone besides the actual homeowner when working out a repayment plan to stop foreclosure.
Case reviewers and consultants
This scam is one of the most devious out there, because these criminals will offer to review a homeowner's situation for an up front fee and will actually deliver on their promise. The catch, though, is that their review is 100% useless and their recommendations usually have nothing to do with the current foreclosure situation. Homeowners should absolutely read the agreement that they are being presented with before they allow a consultant to review the case and provide them with pointless recommendations. We have seen so-called “work agreements” that specify the case reviewer will do such worthless tasks as recommending improvements to the property, conducting an onsite walk through of the property, and helping the client clear up inaccurate credit report information. None of these actions have the first thing to do with helping a homeowner stop foreclosure and save their home. In fact, until a foreclosure victim has found a solution to foreclosure, they should not even consider improving the property. And if they have sent money to a consultant who has done nothing helpful, they should request a refund immediately.
The news itself, though, does make a difference to foreclosure victims nationwide, as MarketWatch reports that "Sales of existing U.S. homes rose 0.5% to a seasonally adjusted annual rate of 6.24 million in October, the first increase since February." Essentially, this means that homeowners stand a better chance of selling their homes to stop foreclosure, if that is the only option they are left with.
In addition, with more homes being sold, that translates into higher home values, eventually. With seven months of slowing sales and decreasing home prices, a small relief is quite welcome. For foreclosure victims, the possibility of a foreclosure refinance goes up dramatically as home values increase. With strict loan to value (LTV) requirements on most foreclosure loans, increasing values can give homeowners the last little chance to qualify for a straight refinance to stop foreclosure.
In the short term, though, house prices are continuing to fall; i.e., stabilize. The amount of homes available in inventory is also continuing to rise, indicating that supply and demand for homes have not yet reached equilibrium. Of course, this is not good news for foreclosure victims, but the increase in sales does provide a measure of relief for homeowners.
In fact, the good news may be only a small sliver of hope for the economy, which is still in danger of a continuing near-term downturn in the housing market. However, any news that may positively affect homeowners in hardship situations is more than welcome.
In fact, this review may be seen as a companion and background piece to our article on equity investing within a community to stop foreclosure.
Dillon, Read & Co., Inc. and the Aristocracy of Prison Politics is a book that was published as a series of articles online. The author is Catherine Austin Fitts, a former Wall Street investment banker and Assistant Secretary of Housing/Federal Housing Commissioner for George H.W. Bush.
The book follows Fitts as she discovers the prevailing visions of policymakers, both public and private, who are exercising control over the country and the world. Topics that are covered include drug smuggling, money laundering, the "War on Drugs," the housing bubble, and general corruption in Washington and Wall Street.
As Fitts draws the map of where the United States has been heading over the past decades, the perspective is at turns historical, informative, and autobiographical, as fits the situations.
The beginning point of the map is Fitts' work at Dillon, Read & Co., a Wall Street investment banker, during the transition when Reagan took office. Ownership of the firm changed hands, and leveraged buyouts became the new trend on Wall Street.
Another landmark that Fitts points us to is the story of RJR Nabisco, one of the largest food companies in the world that also markets cigarettes. It is RJR's involvement in the drug trade and money laundering that Fitts focuses on, especially the use of cigarettes as an alternate form of currency in the black market, and RJR's complicity and knowledge of the situation. In fact, the EU has brought a suit against RJR, detailing how the laundering scheme worked for drug smugglers.
To illustrate government involvement and complicity in drug running in the US, Fitts examines the Mena, Arkansas, and South Central Los Angeles, California cases. This is also where Fitts introduces the reader to Stanley Sporkin, the CIA General Counsel during Iran-Contra, and a judge in Federal Court. According to the author, this appointment left "the CIA with a legal license to team up with drug dealing allies and contractors."
The next topic Fitts looks at is how leveraged buyouts work. In essence, the buyer purchases the company on credit. The credit is backed by the target companies future ability to pay back the credit. This puts the creditors in charge of the company, essentially, regardless of which company originally purchased the target. She also points to the KKR takeover of RJR Nabisco, which Dillon, Read & Co. was involved in.
After leaving Dillon, Read & Co., due to their losing sight of the line "between financial engineering and financial fraud," Fitts was appointed as Assistant Secretary for Housing - Federal Housing Commissioner for FHA. In this position, Fitts runs into a number of situations showing that the government was quite complicit in losing the money of citizens in order to benefit private interests.
Fitts also moves into the area of prison politics and financial investment in companies that run prisons. This is where her argument begins to put some of the pieces together regarding the drug connection, government complicity in smuggling, and prison profits. Many of the aspects of these lucrative prison investments have their beginning in the outsourcing of public management of prisons to private companies traded on Wall Street. Fitts uses Cornell Corrections as a typical example, as well as its connection to Dillon, Read & Co.
Fitts states that the capitalization of prison companies is based on the price of each prisoner. For example, for each additional prisoner Cornell houses, he or she is worth roughly $24,000 to the company and its shareholders. In effect, this makes putting more people in its prisons a goal of these companies. This is where the drug connection comes into play. As the government allows and aids drug smuggling, citizens are caught and sent to jail, increasing the stock prices of prison companies. And many public names end up on the boards of these private companies, after leaving Washington.
Fitts, after leaving HUD, begins her own investment firm, Hamilton Securities. After making attempts to make money for HUD, as well as helping communities, some of Hamilton's investments end up putting together a program called "Community Wizard." This intriguing program was designed to allow citizens to go online and view exactly where government money was being spent in their communities. The only problem with the software was that it would expose the excessive waste of government projects, and the insider deals and financial arrangements made between government and private interests.
The public would also be able to see that money spent for the "War on Drugs" was being spent in areas that had the most drugs and large turnovers of houses; i.e., drugs would be brought in, citizens would be arrested for drugs and sent to private jails, their houses would go back to HUD, who would allow other private interests to make money on the defaulted homes.
Of course, the government could not allow Fitts to continue on with this line of examination and make it available to the public. So, in a lengthy lawsuit against Hamilton, the government was able to destroy or seize most of the software and information, all without ever winning a case against either Fitts or Hamilton Securities. Problem solved.
Fitts also touches on a huge number of other topics relating to these issues, including Dillon's eventual cashing out of Cornell, the Carlyle Group, the Harvard Endowment, Richard Grasso's meeting with Colombian FARC drug smugglers, Citigroup, and others.
And where does Fitts' map lead? In the end, she shows us how the vast majority of policymakers are not interested in changing how thing work; they are more than content to "go with the flow" of things. And private citizens, who may hate "the system" and yearn for change, are being gladly used as the conduit for "the system" that they hate.
Dillon, Read & Co. and the Aristocracy of Prison Politics was written to show us how the worlds of government and private businesses are in fact the same world. She leaves us with the hope of creating a new, better world on a smaller, community-focused basis, where money and power are taken out of the hands of large government and big businesses, and put back into the communities in which we all live.
As more stories come out every day about the sinking housing market and rising interest rates, the amount of homeowners who have missed more than one mortgage payment is increasing by large numbers. It is in an environment such as this that both homeowners and investors can pool their resources to accomplish two things that debt financing never will: stop foreclosure by putting the homeowner in a better position, and make an investment in the community that is not relied upon by debt.
Many homeowners will try to refinance their homes when they begin missing payments, in the mistaken belief that they can find a “magical” new loan program that allows for missed payments, low credit scores, and very little income. Unfortunately, it is doubtful these types of programs exist for any homeowner who has failed to pay their mortgage. Even the most generous hard money or conventional loans will have high interest rates (11-20%), high origination fees (5-7%), and require low loan-to-value (LTV) ratios to exist (50-65%). All of these factors will stack up against the homeowner, who is constantly told by mortgage brokers that they will keep working on looking for programs that are simply not available.
And even if the foreclosure victim does manage to obtain a conventional mortgage, how long can he expect to pay the loan before missing another payment? The high monthly payments on the new loan will prevent the homeowner from being able to establish any kind of emergency fund to begin saving in the event of another hardship. Although possible, it is unlikely that anyone, let alone a former victim of foreclosure, will be able to establish the means to last 2-3 years without needing to fix a leaky roof, have a car repaired, or fight off a medical condition. Addressing any of these situations will be nearly impossible if the situation is compounded by a high mortgage payment and no emergency fund.
Homeowners who have plenty of equity and are able to qualify for new debt in the form of a mortgage are also more susceptible to mortgage servicing fraud, a topic too broad to cover here. However, high equity, high payments, and low credit scores are all contributing factors to this type of fraud, and homeowners should be very careful to watch out for signs of it.
Most of these problems can be lessened or eliminated with the use of equity investing, as opposed to using debt to obtain a mortgage loan. Equity investing requires a private investor, usually located in the same geographic region as the property, using his own cash or means of getting cash to invest in the house. Many private investors, even within a few years of beginning a serious plan of real estate investing, can self-finance homes out of foreclosure.
Using equity investing to help a homeowner stop foreclosure has a number of benefits over a homeowner obtaining more debt.
First of all, the investment by the private lender will keep money in the community. A self-financed investor can purchase the home out of foreclosure and do with it what he will. This can include allowing the original homeowners to live in the property and purchase it back from the investor over time. This creates a mini-economy in the community and decreases the homeowner’s and investor’s reliance on debt financing. The investor will reap a benefit from the monthly income from the property, and the homeowner will be able to stay in the home.
Another benefit is that homeowners may have more freedom after using equity financing than using debt financing. If a sudden hardship occurs, and the homeowner can not afford the house, the responsibility of paying hundreds of thousands of dollars is not present because there is no loan. Many homeowners are now finding themselves trapped in their homes, unable to stop foreclosure due to little equity, unable to afford the current payment due to the hardship, and unable to sell due to falling home values. Conceivably, no homeowner wants to be trapped in a house due to a debt that is almost impossible to pay off.
One final benefit of equity financing over debt financing is the obvious personal relationship that is achieved between the previous foreclosure victim and the investor. Problems with payments may no longer be met with spending twenty minutes on hold with a mortgage company or mortgage servicing company, only to reach an interchangeable human being, different from the last time the homeowner called, and who will not be the same one to "help" the client the next time they call. Swift foreclosure and aggressive collections tactics may be lessened, as well. And, in general, having a human face on a housing payment responsibility, rather than the mechanical facelessness of a corporation, can help all parties involved come to a mutual understanding in the event a pressing circumstance arises, such as a hardship that will result in a missed payment.
In conclusion, the homeowner in foreclosure who wants to save the home and stop foreclosure is presented with two options. In the first, by using debt financing to obtain a new loan, the mortgage obligation is left with a faceless company with no interest in the benefit of the community and which has a prime opportunity to prey upon the recent hardship situation of the borrower via mortgage servicing fraud and other sinister, cunning tactics. In the second, by using equity investing from a local private lender, a benefit is felt among the community, as people work together to keep money in the local economy and achieve a mutually beneficial situation, where mortgage obligations and property ownership responsibilities are shared by all parties, rather than lain at the feet of a trapped borrower who has no way either to escape the trap or even to cause it to loosen its tightening grip around his neck.
We look forward to assisting all of our clients stop foreclosure before, during, and after the holidays. Our offices will be open on Monday, November 27, 2006. Thank you for allowing us to help you save your homes and stop foreclosure.
From,
The ForeclosureFish staff
If you need foreclosure assistance from us, please post a comment on the blog, send an email, complete the evaluation form, or leave a voicemail on our direct number.
Much of the information you need to save your home from foreclosure is freely available on the ForeclosureFish.com website. You are encouraged to read the foreclosure information on the site, and contact your lender directly to start the process of examining a repayment plan.
As a general note, remember to get everything that you discuss with your lender in writing. Verbal agreements or repayment plans mean nothing when you are trying to save your home from foreclosure.
Have a happy Thanksgiving.
The news, blog, and links will be updated over the long weekend.
Many victims of foreclosure are initially lost in a sea of unfamiliar words when they begin missing payments and getting letters in the mail from their lender. Sometimes, half the battle to stop foreclosure is simply in understanding some of the terms that explain what is going on in the foreclosure process. Listed below are brief definitions and explanations of a few of the most common terms that apply to foreclosure situations.
acceleration clause
A clause in a mortgage which allows the lender to demand payment of the outstanding loan balance. The most common reason for accelerating a loan is if the borrower defaults on the loan or transfers title to another individual without informing the lender.
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This means that when you miss a payment and go into foreclosure, the lender will begin accelerating interest and fees on the loan. It also means that if the lender accepts a payment, the acceleration will stop, which is why lenders will not usually accept partial payments, or even full payments if you are more than a month behind.
credit history
A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.
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Once a lender begins reporting your late payments or non-payments to the credit bureaus, your recent credit history will cause your overall score to drop significantly. This is the main reason why it is so difficult to refinance a home out of foreclosure.
eviction crew
Workers who accompany the sheriff on behalf of the lender to assist in the eviction of an occupant from real property. The eviction crew are the workers who will actually move the occupants belongings from the home to the street/yard/driveway/sidewalk and then change the locks to keep the previous occupant from returning to the home.
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This is the most dangerous occurrence in the foreclosure process and marks the end of the line for homeowners who have not found a solution to stop foreclosure. Once the sheriff evicts a homeowner, the only option left is to purchase the home back. Not even selling the property can be considered.
modification
Occasionally, a lender will agree to modify the terms of your mortgage without requiring you to refinance. If any changes are made, it is called a modification.
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Loan or mortgage modification is one of the main options to stop foreclosure, which all homeowners in hardship situations should examine.
quitclaim deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
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Be careful about signing any kind of quitclaim deed. Also note that, simply signing a deed to your home over to someone else does not relieve you of the responsibility of paying your mortgage.
sheriffs sale
Public Auction of a borrower's assets seized in a Foreclosure order obtained from a court, and carried out by a sheriff or other court officer. Assets pledged as loan collateral and secured by attachments, liens, or mortgages may be sold at auction.
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The sheriff sale is one of the more important dates during the foreclosure process. Depending on the state foreclosure law, ownership of a home may be completely transfered after the confirmation of the sale. This is what makes it so important to stop foreclosure before a scheduled sheriff sale date.
The following government agencies deal directly or indirectly with various aspects of the real estate industry. Many of them provide some sort of free foreclosure help for homeowners who find themselves in a hardship situation, unable to pay their mortgage. Knowing the background of these entities will give you more information to stop foreclosure; in fact, some of these agencies directly oversee your mortgage lender.
U.S. Department of Housing and Urban Development (HUD)
HUD was established in 1965 as a cabinet of the United States Government whose principal objective is to develop and execute policy on housing and cities. Major programs overseen by HUD include Community Planning and Development, Housing, Public and Indian Housing, Fair Housing and Equal Opportunity, Policy Development and Research, Government National Mortgage Association, and Healthy Homes and Lead Hazard Control. HUD also provides homeowners in foreclosure with information relating to saving their homes, as well as referrals to housing counseling agencies. Several workout programs are administered or offered directly by HUD, such as partial claim and Pre-Foreclosure Sale programs.
Federal Housing Administration (FHA)
The Federal Housing Administration was created in 1934, with the purpose of insuring qualified private home mortgages for certain types of properties. It is a government corporation overseen by the U.S. Department of Housing and Urban Development (HUD). The FHA provides programs that help clients qualify for mortgages with low down payments, easy credit qualifications, eligibility with less than perfect credit, loans at reasonable rates, and money for repairs. Other services include assisting homeowners who have FHA-insured loans with options to stop foreclosure.
U.S. Department of Veterans Affairs (VA)
The VA, established in 1930 and also called the Veterans Administration, is the federal government’s second largest department, and contains three main subdivisions. These divisions are the Veterans Health Administration, Veterans Benefits Administration, and National Cemeteries Administration. The Veterans Benefits Administration Home Loan Guaranty program is charged with assisting veterans in housing situations, including foreclosure situations. The VA website provides current requirements for obtaining funds from the VA to purchase a home.
Federal Trade Commission (FTC)
The Federal Trade Commission was established in 1914 as an independent agency of the United States Government. The principal mission of the FTC is to promote consumer protection and eliminate and prevent anticompetitive business practices. The Bureau of Consumer Protection performs functions of investigating businesses, enforcing actions, and provides consumer and business education. The bureau is principally concerned with issues related to advertising and marketing, financial products and practices, telemarketing fraud, privacy and identity protection, and enforcement of previous FTC orders. Complaints against businesses can be filed online at the official site of the FTC.
Office of the Comptroller of the Currency (OCC)
The office of the Comptroller of the Currency is a Washington, DC based regulatory agency which charters, regulates, and supervises all of the national banks. It is a bureau of the US Department of the Treasury and the OCC’s Customer Assistance Group helps customers with complaints. Current versions of consumer complaint forms are kept on their website.
All of these agencies have websites which you can find through searching for them on Google, Yahoo, or any other search engine. If you feel you have been a victim of any kind of mortgage fraud that has caused you to fall further into foreclosure, then you should contact these regulators immediately. Even if you are not a victim of fraud or a scam, many of them provide free foreclosure help. Direct contact information to these agencies and others can be found in our foreclosure foreclosure e-book, Theft of the American Home.
As further proof that there really is no shame in being in a tough situation and facing foreclosure, even well-known, supposedly wealthy celebrities go into foreclosure. As some of our visitors may be aware, famous singer Whitney Houston is losing her home in a very visible foreclosure process. Various news articles have appeared recently dishing out details of the star’s pending loss of her home.
Unfortunately, another issue compounding the problems is Houston’s recent divorce from Bobby Brown. According to a story published by News24.com, “In September, Houston filed for divorce from Brown after a 14-year marriage.” Many ForeclosureFish clients experience the same or similar hardships, causing them to fall into foreclosure on their homes. Houston, though, owned several pieces of property, one of which has already gone to sheriff sale, and another that is scheduled for sale in early 2007.
The home that is already gone was located in Georgia. According to the same News24.com article, “Grammy-winning singer Whitney Houston no longer has the Atlanta-area home she shared with husband Bobby Brown. The five-bedroom Alpharetta home went into foreclosure this autumn and was sold on the steps of the Fulton County Courthouse.” It appears that Houston was unable to pay back the arrears on this property, and could not work out a refinance or sale before the property went to sheriff sale. With high-value properties, sellers have a much tougher time finding qualified buyers, but lenders may be more willing to work with distressed homeowners. Banks do not want to own these properties that are difficult to sell.
Houston also owns homes in New Jersey, one of which is going to sheriff sale on January 4, 2007. SFGate.com reports that Houston’s home “faces being seized and sold, because she owes more than $1 million in mortgage payments and unpaid taxes.” Many of our clients, as well, rack up huge arrearage amounts. We do not often see over $1 million in arrears, but tens of thousands of dollars in late fees and court costs are common. Lenders also accelerate interest and penalties to inflate the payoff amount and raise the price at sheriff sale. The Fort Wayne Journal Gazette, in a brief article from November 17, 2006, states that “A sale could be averted if Houston reaches a settlement with the service agent, Sheriff’s Sgt. Steve Ackerman said.” Our book on foreclosure explains additional ways that Houston could postpone the sheriff sale, as well as reaching a settlement.
But if the sale is conducted, Houston will lose one of the properties that are on the estate. According to SFGate.com, “Houston will only lose one of two properties that occupy her estate -- which she bought in 1987 for $2.7 million -- the one valued at $889,300. An adjacent house is valued at $5.6 million.” The other property will still remain in her possession and hopefully will not go into foreclosure. If she is behind on the second property, though, that one will be auctioned off as well, at some point in the future.
Finally, Houston is exhibiting a common occurrence in foreclosure situations: she is denying there is a problem, even though it is apparent to nearly everyone that she is losing her property. SFGate.com reports that “The 43-year-old singer has dismissed the reports to Associated Press and her publicist insists the property is not in foreclosure.” Denying the foreclosure problem exists is found in large numbers of our foreclosure clients. Unfortunately, denial will not help the situation in any regard. In fact, it is best to request help as soon as a homeowner misses a payment.
It is the hope of ForeclosureFish.com that Houston is able to save the property from going to sheriff sale, or at least sell the home if there is no other available option. News24.com reports that “She remains in Los Angeles, where she is working on a new album.” Sometimes work is the best solution to growing money problems, including divorce and foreclosure.
Many of the sites below are web directories that provide visitors with a large group of links to websites relating to nearly every imaginable topic. You are encouraged to view their listings, if you have time while attempting to stop foreclosure. Many of the websites and articles included on these sites are filled with invaluable, free information.
ForeclosureFish.com is in good company with many of the sites listed on the directories, and we will continue to try to reach as many foreclosure victims as possible.
We're glad to announce that some new and exciting changes are in the works for the ForeclosureFish.com website. We are optimizing the entire site for other browsers besides Internet Explorer, including the FireFox web browser.
Also, keep an eye on the "Foreclosure News" section of the site, as new stories will be updated on a continual basis to help all of our visitors save their homes from foreclosure.
The main focus of our site from Day 1 has bee to help people stop foreclosure and have as many options as possible. The new updates that will be should be completed by the end of the week.
Thanks for patience, and we look forward to making our foreclosure help process even better for you.
Numerous stories have been appearing in the previous weeks detailing the worsening foreclosure situation across the country. New numbers have come out recently from Realtytrac and ForeclosureS.com. Just today, a story ran on the website for Default Servicing News with the title ”US Foreclosure Rates Soar 19.6 Percent.”
The report by Default Servicing News starts out by stating that, “Foreclosure rates are running rampant,” and, “Fueled by the high cost of energy, rising interest rates and lenient lending, homeowners in the thousands are losing their homes.” We have known for years that most victims of foreclosure find themselves in these situations because of financial hardships.
The article also summarizes foreclosure statistics from ForeclosureS.com. According to ForeclosureS.com, which show that the Southwest section of the country has experienced the highest foreclosure filings, including California, Texas, and Colorado. However, no part of the nation has experienced a let-up in filings. Foreclosures in the states of New Jersey, Alabama, and Illinois have experienced double-digit increases in foreclosure filings, as compared to 2005.
Another article from Yes Weekly reports on the situation of Nathaniel Gibson, man who is in danger of losing his home due to a hardship: “Gibson, 48, faces eviction from the house he inherited from his uncle less than a year ago. He suffered a stroke and was hospitalized for five days in January. Faced with mounting medical bills, he found himself behind on mortgage payments and faced foreclosure.” Unfortunately, Gibson is not the only homeowner in danger of losing a home that means a lot to him, due to a hardship that was unavoidable.
As more ARM payments increase, and the housing market continues to slow, and more homeowners face hardship situations, more stories like this will appear in local news arenas. Possibly the only consolation to the story is that Gibson did not fall for any of the numerous foreclosure scams listed in our book.
Sadly, though, according to the Yes Weekly article, Gibson’s situation does not seem to be getting any better: “On Nov. 9 Gibson was asking a visitor for a $10 emergency grant and inquiring about the possibility of food aid. ‘I ain't got nowhere to go,’ he said. ‘I ain't working. I can't borrow no more money.’”
This company sent a devious letter to Maria and her family with the intention of tricking them into believing the letter was sent directly by Maria’s original lender. A copy of the letter is shown here in Fig. 1.1 (not pictured here, see book ). As you can see, the company does not give their name or phone number until the very end of the letter, but mentions the client’s lender several times. The body of the letter is designed to deceive the reader into thinking that the “Loan Recovery Program” is being offered by Intervale Mortgage Corp., Maria’s original mortgage company. A fictional “Loan Recovery Department” is even listed, along with hours of operation and a phone number to call.
Unfortunately, this homeowner was tricked into sending Scam Company No. 1 a check for $675.00. Once they received her money, they did absolutely nothing that their letter stated. A special forbearance was not structured, and Maria’s payments were not placed on the back of the loan. The owner of the property never received any proof that the company even attempted to contact the lender, and the scammers stopped answering Maria’s calls shortly after they received payment.
When the client contacted Adama about obtaining a refund, Adama immediately began researching the company, recognizing it to be a scam. A search through the Better Business Bureau online database revealed the location of Scam Company No. 1, phone and fax numbers, and the owner’s name and email address. Also, a history of complaints was discovered, with a number of former clients apparently requesting refunds when no work was done on their case.
The next step for Adama was to research every consumer advocacy group and regulatory agency that the client could submit her complaint to. These entities included the BBB, attorneys general, departments of real estate, the Federal Trade Commission, and the NAACP. The president of the scam company was then called and Adama verbally requested a refund on behalf of Maria, the owner of the property. The president responded by saying a refund would not be sent to the client and proceeded to hang up on the manager from Adama. A letter was then written, giving Scam Company No. 1 a deadline for refunding the payment, and the letter was sent to the president of the company. If no refund was received by Maria and her family by the end of the deadline, the numerous complaint letters would be mailed out. (A customizable version of this letter is included in Appendix B of the book Theft of the American Home.)
After this exchange, the company refunded the $675.00 in full. The owners now had an additional $675.00 to fight foreclosure that they thought they had lost to a company that turned out to be nothing but a scam.
Apparently, another homeowner in foreclosure has been victimized by Foreclosure Assistance Services. A Denver affiliate of ABC, The Denver Channel, reports the story of Debbie Grace, who was mailed a brochure from Foreclosure Assistance Services.
Unfortunately, this report illustrates the consequences of trusting a company who tells you that they will take care of everything for you. As The Denver Channel story states, “Foreclosure Assistance told her to stay out of the way. She said they told her not to call lawyers or the mortgage lenders and that they were going to do all the work. ‘They were going talk to the mortgage company and talk to the lawyer ... but the girl couldn't tell me (what they would say.) She said we've got to get this paperwork filled out and then we can go from there,’ Grace said.” No one should ever trust any company to deal directly with their lender or their attorneys.
When the homeowner gave FAS all of her trust, she allowed them to take advantage of her. When they told her not to contact her lender or their attorneys, they knew they were going to do nothing for her, and that’s exactly what they did. According to Grace, FAS said “we'll help you save your house and that's what I was trying to do. They wanted $1,000.” Not surprisingly, though, the company did nothing for Debbie and she lost her house.
Thankfully, there was a somewhat happier ending than there could have been, as Foreclosure Assistance Services refunded Grace’s payment, after she complained to the bank her credit card is with.
However, never trust anyone to be the sole negotiator between you and the mortgage company. Unless you hire an attorney, no one has the authority to make any serious decisions about your loan besides yourself and the lender, or their attorneys. Also, as we have warned over and over again, be very careful about sending money up front to anyone until you know exactly what you are paying for.
If you have been taken advantage of by a foreclosure scam company, then you may feel helpless and violated. It is hard to imagine that people would target and steal from homeowners who are losing their homes. Unfortunately, it happens on a daily basis all over the country. Any simple search of news articles will prove this. But there are ways to fight these companies, get back the money and some of the time you have dedicated towards them, and make sure they never take advantage of you or anyone else again
Your first priority should be saving your home, but the money you sent to the scammers can and should be used to help you achieve that. You can not afford to waste hundreds or thousands of dollars on companies who promise to help you and then begin giving you the run-around and stop taking your calls. So if you've found that you sent money to a scam, you should request a refund and not give up until they have complied with your request.
The first person you should contact about a refund is the president or owner of the company who stole your money. You can plead your case to him or her, but do not expect to get results. Many owners of scams are not willing to part with the money they have tricked you into sending to them. However, you should call them with your request so you can inform other agencies of your attempts to resolve the situation. Remember to put your refund request in writing and give the company a set period of time to send your payment back to you.
If the scammers do not send you a refund in the time you have given them, then the next step should be contacting their state and your state attorney general. There is usually a department handing consumer fraud cases, and you should forward your complaint to them. Make sure you also include any documents and correspondence from the company you are complaining about. This means you should send documentation of phone conversations, emails, and a copy of your faxed request for a refund. Also let the attorney general know that the company is targeting homeowners in foreclosure and that you are in more danger of losing your home after dealing with this company than you were before. The attorney general can investigate the company, sue them, shut down their offices, order them to give you a refund, and imprison or fine the owners.
Depending on the type of transaction and the activities the scam company was to perform, you should forward your complaint to a number of other regulatory agencies. Every state has a department that regulates banking, mortgage and real estate transactions. Look them up online and contact them regarding your refund request. They will be able to help you or can forward your concerns to the correct department. Hopefully they will be able to get your refund and shut down the company that took your money. There are also federal agencies, such as the Federal Trade Commission, Office of the Comptroller of the Currency, FBI, and your local representative of Congress.
While these actions may result in getting your money back, filing a complaint with your attorney general or applicable state and federal regulatory agency will not prevent other homeowners from being taken advantage of, unless they shut down the company and imprison the owners. In order to protect others in your situation, make sure that the company's reputation is affected. This can be done in three ways: complaining to the Better Business Bureau, informing local news stations, and telling your story online in discussion groups and forums.
Filing a complaint with the Better Business Bureau can be done either online or in writing. While the Better Business Bureau does not have regulatory oversight over any company, they will review your complaint and forward it to the company. The company will then have to respond to your refund request, and you will be able to tell the Better Business Bureau if their response adequately answered your request. If a number of complaints are received, the BBB can alert state and federal regulatory agencies, deny the company's membership, and list the details of complaints in the company's report.
If you know of other clients who have been taken advantage of by the scam company, you may want to contact your local network news affiliates (ABC, CBS, NBC, FOX ), and tell your story there. They may run a feature on your situation and let their viewers know that the company is tricking people out of their money or homes. News stations may become especially interested in your situation if you have also filed complaints with the attorney general.
The last option for ruining the scam company's reputation involves posting your experiences online. By posting in public forums or starting your own website that exposes the company, your story may be seen by hundreds or thousands of potential customers. In fact, your story may show up right next to the company's official website in search results, warning all visitors that the company is stealing money and is currently under investigation by the attorney general and other agencies. Posting on internet forums is a great way to warn others about scams, and no company likes to see negative information about them online.
Although we have been familiar with the problem of inflated appraisals for some time, the trend seems to be growing worse by the day. More and more clients who call us have been the victims of over-inflated appraisals. When the illegal appraisal is discovered, it is usually too late by then to hold anyone accountable, especially if the homeowner is now in foreclosure. Saving the home is the top priority – anything else comes after that.
Why do appraisers inflate appraisals? The main reason is money: the appraiser gives the loan officer whatever value is needed for a loan, so the loan officer will use the appraiser again and again, inflating the value of numerous properties. But when the homeowners attempt to refinance, if they use a different mortgage company, the legitimate appraiser will value the property at its actual (not inflated) value. This may cause a significant decrease in value, sometimes to the point where a client owes more on the mortgage than what the property is worth. Obviously, this can cause significant problems.
And the main problem with the inflated appraisal? There may be no accountability on any entities’ part. The lender can blame the loan officer for submitting a bad appraisal, the loan officer can blame the appraiser, and the appraiser can blame the market, location, timing, etc. Appraisers generally do not make enough money to be worth a lawsuit, as well.
The problem has become so vast that even mainstream news outlets have begun to address the widespread situation. James Hagerty and Ruth Simon of The Wall Street Journal report that, “As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: Inflated appraisals of home values.” When home prices were increasing at high rates (over 10% per year in some areas), the value would catch up to the inflated appraisal. But the slowing housing market has caused some home prices not only to fail to catch up to the appraisal, but fall far below the appraised value.
For victims of foreclosure, this means that two valuable options for saving the home are immediately eliminated: selling the home, or refinancing. As the article explains, “For sellers, that can mean being forced to drop their asking prices. Some people hoping to refinance, meanwhile, may be unable to lock in new loan terms because they have less equity in their homes than they thought.” In fact, Jacquie Doty of Freddie Mac says that inflated appraisals may lead to more foreclosures.
Another contributing factor to the problem is that most home buyers just want the home, as long as the process is as smooth and easy as possible. Bankrate.com states that “Many homeowners don't think about how loans get done, just whether they're approved.” Overlooking the appraisal and just focusing on owning a home is a huge mistake to make. To protect themselves from the consequences of inflated appraisals, the article states that “Borrowers should also get a rough idea of their property's worth before shopping for loans. They can contact local real estate agents or visit one of several registration-required Web sites, including Domania.com andHomegain.com, for such estimates.” Also, always ask for a copy of the appraisal the lender is using when applying for a mortgage. The right to receive the appraisal is granted under federal law.
According to another article from The Wall Street Journal, “Some lenders are getting pickier about the appraisers they do business with -- a policy that is easier to enforce now that refinance activity has slowed.” This means that as more appraisers who inflate appraisals end up on lender blacklists, properties will be appraised for their true values. When conducting a real estate transaction, the article suggests that “homeowners should request that the bank uses a 'designated' appraiser and not simply one who meets state licensing standards.”
However, the issue of inflated appraisals put the mortgage and real estate industry in a Catch-22. A cause of concern exists in the housing market if inflated appraisals are not used. Namely, if property values are estimated lower, then the housing market may continue to slow. The lending industry has caused its own financing problem by contributing to an already growing housing bubble and then assisting in the decrease in home values by no longer accepting inflated appraisals.
The potential effects of this could be devastating to homeowners in hardship situations. For example, consider if a lender first accepts an inflated appraisal and gives a purchaser a loan for more than the value of the home. If the borrower then experiences a hardship and falls into foreclosure, they may try to refinance the loan. But with a new, legitimate appraisal, the homeowners may end up owing too much to qualify for a refinance. Then the lender will either have to take a loss by accepting a lower payoff amount because the home is worth less than originally thought, or they will have to take a loss by selling the home at a sheriff sale.
Either of these choices puts the lender in a bad situation, which would not have occurred if the borrower had not fallen behind. They may be less willing to work with the homeowners, push them further into foreclosure to cut their losses as quickly as possible, and accelerate more and more fees to try to obtain a deficiency judgment against the borrowers.
If you are a homeowner who suspects an inflated appraisal, you may want to call an independent appraiser yourself and have the value of your home estimated. If that value and the amount of your loan are far off, you may have been a victim of mortgage fraud. In this case, refinancing may no longer be an option and you may not even be able to sell the home if you wanted to. You are effectively locked into your home.
You may view our Yahoo! Answers profile for our company here.
In addition, we have answered a number of foreclosure-related questions on other public forums. A few of them include All-Foreclosure, Foreclosure Talk, and Foreclosure University.
We plan to make sure that victims of foreclosure have confidence in the answers they receive from public forums. While many companies and scam artists will directly email the client with sales pitches, we make every attempt to provide the answers the homeowners are seeking.
Please do not hesitate to ask us questions directly, as well. You may send us an email to info@foreclosurefish.com, or go directly to our Contact Us page, or fill out a confidential evaluation form online.
A systematized version of nearly all of the answers we have provided during a three-year period is available in our newly updated book, Theft of the American Home.
If you have any suggestions or ideas about how to make our site more user friendly, or you have any questions or comments at all, please contact us.
Also, please feel free to visit some of the links on our site, as they contain more information on foreclosure and how to stop foreclosure. We have found the information they provide to be extremely practical, well-written, and useful.
According to the most recent report from RealtyTrac, some 318,355 properties entered some stage of foreclosure in the third quarter of 2006. This is a 17 percent jump from the second quarter of 2006, and a 43 percent rise from last year during the July-September period.
Colorado again posted higher numbers than any other state, with 14,374 total filings. This is equal to one foreclosure for every 127 households in Colorado. Foreclosure rates in this state are up almost 70 percent from third quarter of 2005.
Georgia was close behind Colorado with one property entering into foreclosure for every 195 households, and 15,841 properties entering foreclosure in total in the state. Other states posting high foreclosure rates include Nevada and Florida. Only thirteen states posted a drop in foreclosure rates from third quarter of 2005.
According to James Saccacio, CEO of RealtyTrac, "Higher interest rates and a general softening of the real estate market are the two key factors contributing to the 43 percent increase in foreclosure filings from the third quarter of 2005.” He further stated that, "What our third-quarter research appears to be showing is that the first wave of adjustable rate mortgages is having a negative impact on the number of homes going into foreclosure. With the volume of these loans -- more than $1 trillion of them due to adjust over the next 15 months -- this is a trend that definitely bears watching."
If you have an adjustable rate mortgage that may be increasing soon, you should consider refinancing your loan before it is too late. Especially if you do not have an emergency fund established in case of a financial hardship, you should immediately look into refinancing. Hopefully, an emergency will not arise, but we all know that life happens.
For the readers who are already experiencing the higher costs of Adjustable Rate Mortgages, and are behind on payments, you may want to consider utilizing various sources for refinancing, lender workout programs, or private lenders. You should not allow your lender to take your home from you after forcing you into an adjustable rate mortgage.
The Chicago Tribune ran a story this past week titled ”Man Admits Bilking Those Facing Foreclosure.” The story details an individual scammer, who called himself John D. Cash, Jr. and Typhon Ra, who used one of the most common scams listed in our foreclosure e-book, which involves both investor and debt collection scams. The man would promise to delay “foreclosure for his clients,” and “provide them with free and clear titles to their homes within two years.” In reality, according to the story, the man would only attempt to delay the foreclosure in order to pocket as much of the clients’ monthly payments as possible.
The most likely way this scam works is that an investor persuades a borrower in default to sign over the home, promising that this will make the investor liable for the monthly payment, which he will collect from the homeowners and forward to the lender. This is nothing but a scam and a lie, as signing over the deed to a home does not relieve the original borrower of their responsibility to pay their mortgage. The scammer will sit on the house, collecting payments and waiting for the home to go into foreclosure. Once the home sells at sheriff sale, the purchaser at the sale will own the property, clearing all other names off the title. In this way, the criminal investor can pocket tens of thousands of dollars; in this case, John D. Cash stole nearly $190,000 from unlucky homeowners.
The L.A. Times also ran an article on foreclosure scams as recently as yesterday, November 5, 2006. The story focuses on the equity skimming scam, also detailed extensively in our foreclosure e-book, and how it is used in conjunction with equity sharing programs. Equity sharing works when homeowners purchasing a home will find “private investors willing to share the cost of the home in return for future appreciation.” While this practice has led to more buyers qualifying for loans, this same technique has been criminally twisted by some immoral investors. Investors may persuade homeowners to sign over the deed to their homes and charge rent on a monthly basis. The problem comes when the former homeowner can not afford the higher monthly payment and “the investor ends up with the title or rent payments — sometimes both.”
In response to scams like these and numerous others, the Mortgage Bankers Association of America “has unveiled a consumer education campaign called Stop Mortgage Fraud in an attempt to help prevent scams and predatory lending.”
If you feel you have been taken advantage by one of these scams, or any other scam, you need to request a refund and protect yourself right now. Contacting a lawyer or regulatory agency is one of the best ideas you may have at this point. However, remember that saving your home should be the number one priority if you are in a foreclosure situation. While scammers should not be allowed to get away with their actions, you must find a way to stop foreclosure.
ForeclosureFish.com is dedicated to providing you with the most up-to-date news on foreclosure scams and any new discoveries of scammers and their devious techniques. As new scams are discovered, we will post them on our foreclosure blog, as well as our dedicated scam page.
New Website, E-book, and lender services being premiered nationwide.
Chicago, IL November 3, 2006 – ForeclosureFish.com is partnering with Adama Properties, LLC, to reengineer the foreclosure relief industry. Adama Properties remarks “The foreclosure industry needs to be more focused on helping people save their homes by providing multiple options. We’re designing a ‘total homeowner centric’ experience for everyone; lenders, investors, attorneys, and, most importantly, victims of foreclosure. We want foreclosure relief to be about saving homes, not selling services.”
The below described premieres will be offered by ForeclosureFish.com, utilizing the unique foreclosure experience and materials of Adama Properties. Using these highly tested and refined processes, ForeclosureFish.com will have a substantial advantage when helping homeowners in danger of losing their homes.
The new revisions include a completely redesigned website, updated and expanded foreclosure e-book, and state-of-the-art back office support. The goal of these expansions is to promote low stress foreclosure relief, multiple options for saving a home from foreclosure, increased efficiency in researching foreclosure situations, and maintaining a positive reputation among homeowners and within the foreclosure industry.
“We will implement a simplified process to assist foreclosure victims in obtaining numerous options for saving their homes, while walking them through every step of the process,” says ForeclosureFish.com. Homeowners will be able to call about any hardship situation that is affecting their ability to pay their mortgage, without the fear of foreclosure scams or high-pressure sales tactics. If a foreclosure victim wishes to know his or her options for saving the home, a board review of managers takes place: information is verified, lines of communication are opened with the foreclosing bank, and options are examined for stopping foreclosure. Results of the review are presented to the homeowners, who are able to decide themselves which option will fix their situation. The foreclosure victim can examine each option in depth and have any questions clarified with a manager, pressure free.
The ForeclosureFish.com total homeowner centric program will be promoted in the online arena through the official ForeclosureFish.com website, blog, in public forums, and through media – locally and nationally. Those foreclosure victims wishing to learn about their options to save their homes are encouraged to email ForeclosureFish.com directly, or submit a confidential evaluation form online.
However, most homeowners are drawn in by these scams because they are too unnerved by their current situation to contact their lender. They are afraid of admitting their failure, and are easily tricked into asking for help. The purpose of this post is to show homeowners in foreclosure how to approach their lender when attempting to work out a solution.
How to Contact Your Lender
Your very first question when facing foreclosure may be "Well, how do I contact the lender the first time? I've been ignoring their calls for months, and now I have to let them know I'm not a deadbeat. They won't believe me if I just call them and tell them that." You're right, they probably will not believe you if you first ignore their calls for months and then call them and say you intend to solve the problem.
But as hard as it may seem, you should call them and let them know you are determined to keep your home and repair your reputation with them. Ask for the representative who is the point of contact for your file, and speak with him or her personally. You may have to leave a message, or several messages, before you receive a call back. In order to save your home, you will need to exercise persistence. Keep attempting to get in touch with a decision maker from your lender.
This is a great time to start documenting everything. Write down the date and time whenever you attempt to contact your lender or their attorneys. Also make sure you write down the name of who you talk to, and what you discuss; if you leave a voicemail, write down the contents of the message. If at all possible, record every conversation you have with your lender by using a tape recorder, cell phone that can record conversations, or a computer. In the event you have to speak with a judge about the case, you must be able to show proof that you have tried working out a solution.
The more work you have done to help yourself, the more the court system will sympathize with your situation. In many cases, the courts can allow you additional time to become current on your mortgage. They can even override the lender's process of taking your home, reverse the foreclosure, or rescind the sheriff sale.
Also, request the lender's representative's direct fax number, and send a letter which states your intention to keep your home and your request for them to help you examine options to get you out of foreclosure and caught up on your mortgage. You will have to ask your lender what programs they offer, since they are not required to inform you of them.
Make absolutely sure you do not delay on this very important step in saving your home. If you are unsure what to include in the letter, you may want to download our foreclosure e-book to view some sample letters to lenders. Depending on your situation, one or more may be appropriate for you to send to your lender in the next few minutes. We have tried to make them as easy to follow and simple to use as possible. Just customize them for your situation and send them directly to your lender as often as is necessary. If you think additional information will assist them in understanding your situation, send that, as well.
Figure out Your Lender's Plans
Your next step should be reading up on as much information about your state's foreclosure laws as you can. Only in this way can you figure out how your lender will attempt to take your home from you. The most important detail you want to find out at this stage is how the lender can pursue the foreclosure. In order to sell your home at a sheriff sale, do they have to sue you and prove in court that you are in default? Or did you authorize them to sell the home if you fell behind?
If you are thinking that you would never willingly authorize the lender to sell your home out from under you, you need to find your original loan documents as soon as possible. The documents may contain a clause that lets your lender sell your home right away if you go into default. This clause is called a "power of sale" clause, and can be used in states that allow a Non-Judicial Foreclosure process.
The main difference between Judicial and Non-Judicial Foreclosure is the procedures the lender must follow to take your home. Judicial procedures require the lender to sue you in court, prove that you are in default of your loan, and obtain a court order allowing them to foreclose on the property and sell it. Non-Judicial procedures allow the lender to publish their intent to sell the property, and then sell it at auction.
Examine the state foreclosure laws listed on our website to find out if your state uses Judicial or Non-Judicial Foreclosure procedures, or both (for even more information you may want to visit your state's official website). For states that use both, you will have to examine your mortgage documents to locate the "power of sale" clause. A small number of states allow a Strict Foreclosure process, whereby the lender can prove your default in court and immediately be awarded title to the home; there is no formal foreclosure process and no sheriff sale.
Once you have briefed yourself on your state's laws and examined your loan documents, you will be more informed than the vast majority of homeowners facing foreclosure. You will also be aware of the specific procedures the lender must follow if they intend to take your home. This knowledge, plus your diligent documentation of your attempts to contact your lender, puts you in a position of strength for the first time since missing a mortgage payment. You should now be ready to begin assessing your situation and determining the best solution to stop foreclosure.
Nearly every section of the old booklet has been expanded, and several new chapters have been added. We have also included copies of forms and letters that we use on a daily basis to help homeowners stop foreclosure. You can use these forms on your own to save your home. State foreclosure laws for all fifty U.S. states are included, along with clarifications of legal terms, time frames for the foreclosure process, and contact information for your state's attorney general.
Find out why bankruptcy and selling your home are bad ideas when you are in foreclosure, and can actually put you in a worse situation. Learn how to save your home the right way, without putting your trust in an attorney who is only out to sell you a bankruptcy.
Also included at no additional charge is our special report on foreclosure scams. Nearly twenty of the most common foreclosure scams are detailed, along with ways to get your money or home back from scammers. Your lender may be taking advantage of you without you even knowing about it.
As a special bonus, we have included a Case Study of our parent company Adama Properties and how they helped one of their clients get over $1,500 back from two separate scam companies.
What about after foreclosure? Well, we've also included sections on how to repair your credit and financial picture after you have saved your home. We've designed these sections with the purpose of helping you qualify for a new loan or refinance within a year after being in foreclosure.
Don't trust anyone else to help you save your home until you've read this book. We know it's not your fault you're in foreclosure, but you can not let criminals trick you out of your home or life savings.
Theft of the American Home -- Save your home yourself and never worry about foreclosure again.
