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When Banks Won't Help Homeowners,,,,,U.S.
When Banks Won't Help Homeowners, Scammers Help Themselves
HuffingtonPost
In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif.
When Mohammed Shukran took some time off from driving his cab to care for two ailing family members in 2009, he began worrying about the mortgage on his Flushing, N.Y., home. He enlisted the services of a company called Save My Home, which charged him $3,000 for a promise to get his bank to lower his monthly mortgage payments. The company advised that it would take 60 to 90 days and that he should stop paying his mortgage in the meantime.
Shukran, 63, said that after he paid the fee and stopped making mortgage payments, he received default notices from his bank. He said Save My Home told him to ignore the warnings.
Two months later -- after a cascade of late fees, penalties, default notices and dings to his credit history -- Shukran, concerned that Save My Home was trying to scam him, decided to resume making his mortgage payments. After about a year, while Shukran was unsure if Save My Home was doing anything on his behalf, Chase Manhattan told him his loan modification had been denied.
"They played games with us," Shukran recalled of his interactions with Save My Home. "We gave them the letter and said, 'Look, the bank denied our loan. Give us our $3,000 back.' But they said no."
Shukran never received a refund, even though, according to his lawsuit against the company, he signed a contract stating that Save My Home would return most of his money if the company failed to get his loan modified. He said he now owes about $10,000 to the bank, on top of his $1,500 monthly mortgage payments, as a result of his run-in with Save My Home.
"I have a lot of stress in my life," he said, "and these people gave it to me."
Shukran is now one of nine plaintiffs in what a lawsuit files last week in Nassau County Supreme Court describes as an "elaborate network" of affiliated companies that have operated under such names as "Save My Home," "Save My Home Now," "Express Modifications" and "Express Home Solutions."
"In typical fashion, these entities pose as experts on mortgage modification issues and promise various relief services in exchange for upfront fees," the Lawyers' Committee for Civil Rights Under Law, an advocacy group which filed the lawsuit last week with help from pro bono attorneys from Davis Polk & Wardwell, said in a statement. "Ultimately, the companies fail to provide the promised services, cheating vulnerable homeowners out of thousands of dollars and leaving them in financial turmoil."
Save My Home's current iteration, according to the Lawyer's Committee, is Empire Home Savings. That company didn't respond to repeated interview requests. Eunice Rho, the counsel representing Shukran and other plaintiffs in the lawsuit, said Save My Home and its affiliates have routinely changed office locations, company names and phone numbers.
"The result is that it's become virtually impossible for former clients to get in touch to ask about progress or a refund, and it makes it very difficult for anyone to keep track of what they're doing," Rho said.
Although Shukran and homeowners like him are eligible for free mortgage advice from government-certified counselors, he has instead become part of a wave of people preyed upon by an industry adept at snaring desperate homeowners with false promises of mortgage relief.
At least 30 states have passed laws to crack down on loan modification scams, and in January, following a 2009 directive from Congress, the Federal Trade Commission issued a new rule forbidding "Mortgage Assistance Relief Services" from engaging in certain practices. The MARS rule is modeled on existing state bans: It prohibits companies from making lofty modification promises or charging upfront fees before a homeowner has signed a written agreement -- and it also forbids them to tell homeowners not to talk to their lenders, a tactic experts say scammers use to isolate homeowners from lenders who might otherwise warn them that there's a problem.
With mortgage servicers often unwilling to modify loans, homeowners have increasingly turned to purported modification experts for help -- and complaints about ripoffs have mounted. The FTC said it received just six complaints about mortgage modification or foreclosure relief scams in 2008. That number shot up to 8,724 the following year, reaching 16,584 in 2010.
"The fact is, if you're a homeowner trying in good faith to negotiate with your servicer, good luck," said Ira Rheingold, director of the National Association of Consumer Advocates, a nonprofit coalition of lawyers and other advocates. "So what you have are a lot of very desperate people. When you have lots of desperate people, all the scam artists and people looking to make a quick buck come out of the woodwork."
LEEWAY FOR LAWYERS
Because MARS companies are small and haven't been around for very long, it's difficult to estimate just how many are out there, but the FTC estimates that there are at least 500. State governments have investigated 450 alleged scams and filed hundreds of lawsuits against MARS companies in the past three years.
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