New Scheme Targets Distressed Homeowners

  
     
September 21, 2011

 

NEW SCHEME TARGETS DISTRESSED HOMEOWNERS

 

LITTLE ROCK -- With the foreclosure crisis continuing, financially distressed Arkansas homeowners should remain wary of offers to assist the homeowner in avoiding foreclosure.

 

Along with the foreclosure “rescue” and mortgage modification scams that have plagued homeowners in Arkansas and nationwide for the past few years, Attorney General Dustin McDaniel says a new scheme offers to include the homeowner in a lawsuit against the homeowner’s lender. The scheme requires the homeowner to pay a fee, but the lawsuit does not exist.

 

“With unemployment remaining at high levels, many Arkansas homeowners are finding it difficult to stay current on mortgage payments, and these distressed homeowners are vulnerable to offers that sound like a godsend, but just make matters worse,"  McDaniel said. He issued today’s consumer alert to help homeowners make sound decisions.

 

These scams offer to "save your home" or "fix your mortgage," but in reality, most only generate a quick profit for the con-artist and provide no benefit to the consumer.  Worse yet, homeowners who follow the advice of the scammers could lose their homes.

 

“The latest scam we have seen is a direct mail piece from an organization purporting to be a California law firm,” McDaniel said. “It suggests that this firm has filed a lawsuit against the homeowner’s mortgage lender and that joining the lawsuit will provide the homeowner with relief from burdensome mortgage payments. In reality, there is no lawsuit and all they are after is an up-front fee from the homeowner. Don’t fall for it.”

           

Homeowners should be careful about doing business with any company that:

  • Calls itself a "mortgage consultant," "foreclosure service," or "loan modification service."
  • Collects a fee before providing any services, or collects a monthly fee until services are complete.  In most cases, charging such fees violates Arkansas law.
  • Instructs you to cease contact with your lender, credit or housing counselors, or lawyer.
  • Tells homeowners to cease making mortgage payments to their lenders.  A con-artist may have you pay your mortgage directly to his company and not the lender.
  • Requires that you transfer your property deed or title to him or his company. Often this will be part of an offer where the homeowner is offered to lease the home back with the promise that he can repurchase in the future.

The Attorney General also has advice on what to do if you are having trouble making your mortgage payments:

  • Don’t wait until you are so far behind that foreclosure is imminent. Contact your loan servicer as early as you can to discuss your options.
  • Ask about your eligibility for a loan modification through a program offered by the lender or through the Making Home Affordable Modification Program (HAMP)
  • Be prepared when you contact your loan servicer with up-to-date information about your current income, assets and the reasons you are having difficulty with the payments. Always engage your servicer when called upon.
  • Be persistent. Follow up promptly with any information requested and stay in touch with your loan servicer. If you cannot get through to them, contact the Attorney General’s office for assistance. 
  • Assistance from HUD-approved counselors is free and opportunities may be available, should your loan qualify. Visit www.makinghomeaffordable.gov or call the HOPE hotline, (888) 995-HOPE (4673). 

If you have any questions about a company offering foreclosure rescue services, you should contact the Attorney General's Office at (501) 682-2007, toll free at (800) 482-8982 or on our website at www.ArkansasAG.gov.

You can also contact the BBB at (501) 664-7274. Or visit us online at www.bbb.org and Start with Trust.