By Mark Huffman
ConsumerAffairs.com
July 9, 2009
More than two years into the collapse of the housing market homeowners are still struggling to avoid foreclosure. Those who turn to the growing number of mortgage modification "experts" are likely to encounter not only frustration, but also fraud.
Shannon, a homeowner in Orting, Washington, paid an upfront fee to a company called Federal Loan Modification. Lately he hasn't been able to get in touch with anyone about his status.
"I do have two other numbers all have been disconnected in the last few days," Shannon told ConsumerAffairs.com this week. "They took my money and basically ran. They assured me I would get my money back but now nothing."
Federal Loan Modification is among 15 foreclosure rescue and mortgage modification companies named last week by New York Attorney General Andrew M, Cuomo as being under investigation.
Cuomo says these companies scour foreclosure notices and filings and prey on consumers desperate to save their homes from being foreclosed. They promise they will negotiate with the consumers' banks to lower mortgage interest rates, lock in fixed rates, get late fees and past due payments forgiven, and even reduce principal balances.
But it almost never works out that way.
Cuomo said he launched his investigation in response to complaints from homeowners that these companies fail to deliver as promised, charge illegal, up-front fees and use misleading advertising to lure consumers into services that oftentimes leave them further in debt, facing a worsened threat of foreclosure.
Nunya, a former mortgage worker from Avondale Estates, Georgia, said she read the long list of complaints on ConsumerAffairs.com about mortgage modification and offered some advice for struggling homeowners.
"You don't 'deserve' a modification," she told ConsumerAffairs.com. "The investor on the loan would rather foreclose on you. Most of the time it's in their best interest. Sorry."
Nunya says only about ten percent of applicants end up having the terms of their mortgages modified to make them more affordable. But its hardly ever up to the bank that services your mortgage to grant you a modification. That decision must come from the investors who own the loan.
That doesn't mean homeowners shouldn't try to work out new terms on their loans, but it's probably wise to avoid any company that offers a guarantee that they can modify your loan, while charging any kind of upfront fee to do so.
