EXIT Realty Foothills Warns Homeowners about Loan Modification Scams

FOR IMMEDIATE RELEASE

Contact:
Jessie Eide
Realtor
EXIT Realty Foothills
909.593.0502
jessiepd@yahoo.com

EXIT Realty Foothills Warns Homeowners about Loan Modification Scams

Loan modification scammers prey on underwater homeowners

La Verne , CA (Grassroots Newswire) 8/24/2010 -- Most homeowners who bought or refinanced after 2001 during the superheated years of the Millennium Boom are in precarious financial straits – their homes being underwater with negative equities and their family balance sheets in the red, insolvent. Since then the economy has crashed and home values plummeted; the low tier is probably near bottom and the high tier has begun its descent at a rapid pace.

To add insult to injury, many negative-equity owners are now falling victim to the operations of unscrupulous loan modification services who demand and collect advance fees then perform little to no services. The scam typically goes like this: a loan modification company charges an underwater homeowner an upfront fee to negotiate a modification of their existing loan with their lender. After the homeowner advances the funds, the individual receiving the funds does nothing beyond laugh all the way to the bank, having effectively stolen the fee from the homeowner.

In order to protect consumers, the California Department of Real Estate (DRE) recommends the following:

• when a lender records a notice of default (NOD), no loan modification service may collect any advance fees from the homeowner, even if they have a real estate license or are an attorney;
• when an NOD has not been recorded, a modification service may charge an advance fee if the homeowner enters into an agreement explaining the services and costs. However, the DRE must approve the agreement being used. Advance fees must be placed in a trust account and can only be disbursed when the services have been rendered.

In light of such schemes, the federal Department of Housing and Urban Development (HUD) is funding $79 million in grants to HUD-approved housing counseling agencies and to state housing finance agencies around the country, an increase of $21 million from last year. $55 million will be allocated to comprehensive counseling, $14.5 million for supplemental funding for mortgage scams and mortgage modifications and $9.5 million for reverse mortgages.

These agencies provide homeowners with free counseling services covering how to:

• avoid foreclosure;
• avoid mortgage scams;
• purchase or rent a home;
• improve credit scores; and
• qualify for a reverse mortgage.

These types of scams had been a continuous problem in California until the legislature passed and the governor signed Senate Bill 94 in October 2009. The new law ended advance fees for loan modification services and requires consumers to be notified of the free services offered from nonprofit government-approved agencies.

Reprinted from first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516

For more information about EXIT Realty Foothills, please call 909.593.0502. EXIT Realty Foothills is located at 1339 Foothill Blvd, La Verne CA 91750.

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