Tag Archives: loan modification

Another Arrest in Nationwide 6$ Million Loan Modification Scam

December 7, 2011

LOS ANGELES— Attorney General Kamala D. Harris today announced the arrests of two Southern California men who, under the guise of an attorney-backed loan modification company, collected more than $6 million from homeowners nationwide for services that were never performed.

Christopher Fox, 37, of Laguna Niguel and Curtis Melone (AKA Curtis Kubat), 37, of Huntington Beach were arrested Tuesday on 37 felony counts, including conspiracy, grand theft and unlawful collection of advance fees. They are being held at the Orange County Jail on $500,000 bail and will be arraigned today in Orange County Superior Court.

Fox and Melone – along with King Harris III, 42, of St. Louis, Missouri – collected more than $6 million in up-front fees through Orange County- based Green Credit Solutions. The Attorney General’s office will seek extradition of Harris, who currently faces federal mail and wire fraud charges in Missouri.

“Homeowners continue to struggle throughout California and across the country to hang onto their homes, and this prosecution is another warning to predators who would seek to profit from their distress: this kind of criminal conduct will meet with swift and certain consequences,” Attorney General Harris said. “Homeowners should never pay up-front fees to reduce their loans. Californians who face mortgage difficulties should instead contact a non-profit housing counselor, either through www.HUD.gov or a local non-profit housing clinic, to learn about the mortgage process and their rights as homeowners.”

In June 2009, the Attorney General’s office launched an investigation of Orange County- based Green Credit Solutions – later renamed Guardian Credit Services and Get My Credit Grade – in response to numerous consumer complaints filed with the office, as well as with the Better Business Bureau, the California Department of Real Estate and the State Bar of California.

Through witness interviews, analysis of the company’s marketing materials, and its business and financial records, DOJ investigators uncovered a scheme in which thousands of victims paid $3,500 for what they believed were attorney-backed loan modification services to reduce their interest rates, monthly payments or principal balance.

From November 2008 to October 2009, Fox, Melone and Harris collected more than $6 million from thousands of homeowners across California and nationwide. Victims were told their funds would be held in a so-called “attorney escrow account” until services were completed. In fact, those fees were often deposited into the account of a disbarred attorney and then promptly transferred to GCS.

Likewise, the company fraudulently claimed that loan modification services would be performed by attorneys; Harris is a disbarred Tennessee attorney and marketing materials referred to his alleged partners at the defunct law firm of “Smith Harris PLLC.”

In May 2011, Attorney General Harris formed a Mortgage Fraud Strike Force to investigate and prosecute mortgage fraud. In August, the Strike Force filed its first suit against a law firm that took millions from desperate homeowners: Click to view

The complaint is attached to the online version of this release at http://oag.ca.gov/

 

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Loan Modification Scams Increase

 

More home owners who are desperate to avoid foreclosure are finding themselves victims to loan-modification scams.

In the latest to grip headlines, attorneys in California — where these scams are particularly rampant — filed the state’s first class-action lawsuit against an alleged loan modification scam, part of RewireMyLoan.com. In the lawsuit, prosecutors charge that the company collected nearly $5,000 each from at least 90 victims, promising to do loan modifications and offering a 100 percent money-back guarantee. The victims say the company never did the loan modification or refunded their payments.

The majority of the victims in the lawsuit are Spanish-speaking, and while the advertising and discussions they had with the company were in Spanish, they say the contracts they signed were in English. The home owners say they were also told to not contact their bank directly or their contracts would be voided. (Read: How to Spot Foreclosure-Prevention Scams)

Scam Prevention Network
The Lawyers’ Committee for Civil Rights, government housing agencies, and other nonprofits have created the Loan Modification Scam Prevention Network to compile complaints about such fraud. From February 2010 to June 1, the network gathered nearly 15,000 complaints involving $37 million in lost money. California accounted for the majority of the losses, with 3,105 complaints filed and $11 million in losses from these scams.

For home owners who believe they were a victim of a loan-modification scam, the Loan Modification Scam Prevention Network encourages them to visit www.preventloanscams.org to file a complaint.

Source: “Lawsuit Goes After Loan-Modification Fraud,” The San Francisco Chronicle (July 1, 2011)

For all your real estate needs, call or email:

John J. O’Dell Realtor® GRI
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The States of Arizona and Nevada Sues Bank of America for Foreclosure Fraud

Bank of America Nevada City, CA

The states of Arizona and Nevada has sued Bank of America for alleged foreclosure fraud.  The lawsuits are very similar in scope, and basically allege that Bank of America engaged in deceptive practices specifically with regard to mortgage servicing, loan modification, and foreclosure.

Arizona Attorney General Terry Goddard said in a press release:

“Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis.  It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole”.

The Arizona complaint alleges that Bank of America committed fraud in Arizona, and mislead borrowers about foreclosure and loan modification programs in the following ways (quoted from the press release):

• Whether homeowners must be delinquent on their mortgage payments to be considered for a loan modification.

• How much time it would take to receive a decision from Bank of America on a modification request or a short sale request.

• Whether foreclosure would proceed while a modification or short sale request was pending, or while a homeowner was making trial payments.

• Whether the homeowner had been approved for a loan modification.

• Failure to provide valid reasons why the homeowner was declined for a modification.

• Whether the homeowner would be approved for a permanent modification if the consumer successfully made all trial modification payments.

The Nevada lawsuit has essentially similar allegations.  Nevada Attorney General Catherine Masto said in a press release:

“We are holding Bank of America accountable for misleading and deceiving consumers.  Nevadans who were trying desperately to save their homes were unable to get truthful information in order to make critical life decisions”.

Wells Fargo Sued Because of Mortgage Practices

New York law firm Harwood Feffer filed a class action lawsuit against a Wells Fargo servicer America’s Servicing Company alleging it induced distressed borrowers to default on their mortgage in order to get a modification, meanwhile accruing late fees and penalties.

According to the suit, ASC allegedly told the borrowers now represented by Harwood Feffer that they would not be able to modify the mortgage as long as they were current. The firm said by making a loan default a pre-requisite for modification — even if the borrower qualified because of financial hardship — credit scores were harmed and fees, penalties and additional interest were charged.

The firm is suing ASC for compensation on those fees, totaling more than $5 million for the 12 plaintiff households. The suit was filed in U.S. District Court for the Northern District of California.

According to the Treasury Department‘s Home Affordable Modification Program guidelines, a participating servicer can offer a modification to a borrower facing imminent default. Wells Fargo participates in the voluntary program, but ASC does not.

Mortgage servicers have come under fire from Congress, regulators, state attorneys general and the public for mishandling foreclosure affidavits. Class action attorneys have used the issue to raise questions over the entire mortgage documentation process, from foreclosures and secularization to now modifications.

Wells Fargo and ASC did not immediately reply to requests for comment.

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Banks Are Still Flakes When it Comes to Loan Modifications

bank

According to the U.S. Treasury Department only 4 percent of home owners who signed up for loan modifications — fewer than 31,000– had received them by the end of November,

Of the largest lenders, Bank of America Corp. had the worst results. It completed a total of 98 modifications. With 7,100, GMAC Mortgage completed the most.

Lenders have blamed their lack of success in part on the failure of borrowers to complete the paperwork necessary for the process.

So lenders are blaming home owners? Well, I don’t think so. I think the banks don’t really care about doing loan modifications. They are very efficient at nickel and diming you with fees for everything, from taking money out of an ATM machine to walking into the bank and talking to a teller. Loan modifiications are at the bottom of their list of things to do.

A great story appeared recently in the New York times that illustrates just how bad, one bank, Wells Fargo has been handling loan modifications.

Here’s a small portion of the article:

“PHOENIX — Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again.

In court, Mrs. Giguere questioned Joe Ohayon, right foreground, of Wells Fargo. He confirmed she had not been asked for a crucial worksheet.

“I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath.

The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case.

At the hearing, Judge Haines made it clear that he was acting out of concerns about Wells Fargo’s mortgage modification practices generally.

“This is certainly not an isolated case,” he said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.”

Under preliminary questioning by one of the bank’s lawyers, Mr. Ohayon stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document in processing a loan modification.

Under cross-examination by Mrs. Giguere (who had a little assistance from Judge Haines), the bank’s defense withered. From her files, Mrs. Giguere produced a letter from Wells Fargo describing the paperwork that she needed to file for a loan modification. In the witness chair, Mr. Ohayon read the letter.

“Mrs. Giguere is right,” Mr. Ohayon concluded. “The letter did not ask for a financial worksheet.”

Wells Fargo has been criticized for its slow pace in modifying mortgages the U.S. Treasury Department’s foreclosure prevention initiative, which was begun in April. The bank has started trial modifications on about 20,000 home loans under the program, or 6 percent of those who meet the program’s guidelines. JPMorgan Chase, by comparison, has begun modifications on nearly 20 percent of such loans. The banks’ information was issued in a recent report from the Treasury on the progress of the program.”

Read the entire article at New York Times

By the way, I’m still keeping track of one of Wells Fargo’s loan modifications for a client of mine. It’s been going on since June of this year. It’s the same old thing, no one in Wells Fargo talks to each other in doing the loan modification. I’ll let you know if they make the modification.

John O’Dell
Real Estate Broker

FAQ About Loan Modifications – The Most Common Questions Answered

stop-foreclosure

Homeowners now have a way out of their financial difficulties using the new home loan modification plan. In the past, when homeowners were finding it difficult to pay their mortgages, there were very few options. The first choice was foreclosure. There are bound to be many questions about this new plan. This article contains many of the answers to the most frequently asked questions.

How Did this Program Come Into Being?

The loan modification program, part of the Making Home Affordable plan, came into effect on February 10, 2009. As of March 4th, 2009, homeowners who meet the criteria can change the terms of their loan so they can keep their homes.

Who Qualifies?

People who live in the home for which they owe the mortgage qualify for a loan modification. The loan must have been signed before the beginning of 2009 and be for no more than $729,750. Gross monthly income will be verified before a loan modification can be obtained.

How Does it Work?

First the percentage of your gross monthly income that is used to pay your mortgage is calculated. Under this plan, homeowners who qualify can have their payments modified so it is no higher than 38% of their total income. Then the government will match the lender’s reduction so the loan payment is lowered to 31%. Once a new monthly payment is agreed upon, it is effective for five years.

What Happens in a Loan Modification?

First, your monthly payment will be looked at as a percentage of your total gross monthly income. Under the Making Home Affordable plan, qualified homeowners can get their loan terms modified by the lender so that their monthly payment does not exceed 38% of their gross monthly income. After that, the government will match the lender dollar for dollar to lower the loan to 31% of monthly income. Those new monthly payment remains fixed for the next five years.

Who is Paying for All This?

The Homeowner Stability Initiative has been formed to make these modifications possible. This initiative will spend $75 billion of taxpayers’ money to offer loan modifications. It is thought that this plan will help 3-4 million homeowners.

What Limitations are In Effect?

This plan is not available to investors and house flippers. A credit check will be done on all applicants to make sure they are actually living in the house before a modification will be granted.

How Do I Apply?

If you are interested in a loan modification, contact O’Neal & Associates for financial advice and help you figure out your next move.

This article is meant to provide some basic information about the government’s Making Home Affordable plan and will help homeowners deal with their monthly mortgage payments.

Source Sarah O’Neal

Foreclosure Crooks Close To Home

 theives

In the continuing fight against scam artists, the Better Business Bureau of Northern California is warning consumers about bogus loan modification companies that make promises about helping borrowers modify their mortgage loans.

You don’t have to look far from home to find one such company, which according to BBB is ShortRefiNow.com located in Roseville, CA. According to BBB, fourteen people have filed complaints with them. The complaints allege that the people paid between $2,600 and $5,300 up front to ShortRefiNow.com to get their loan modified, but the company did not perform or refund their money.

One woman said she gave ShortRefNow.com $3,000 up front to modify her loan based on a recommendation from a friend. She stated that “I kept getting the runaround. They said “I’m not sure who’s taking care of it. The person taking care of it had emergency surgery,” At that point she said “you know when someone is lying.”

After checking with her lender, she found out they had made one call to the lender and asked how do you do a refinance?

According to KCRA 3:

“Another homeowner told KCRA 3 she paid $5,370 to ShortRefiNow.com to modify her loan. She said the company told her not to talk with her lender directly.

She said the company did not secure a loan modification and did not refund her money.
The Department of Real Estate said consumers need to be very careful when deciding to use a loan modification company.

Companies must be licensed with the DRE. Furthermore, in order to collect advance money, brokers must have a specific agreement called an Advance Fee Agreement, approved by the DRE. Brokers may not collect advance fees if a notice of default has been recorded against a property.”

The DRE issued a Desist and Refrain order against ShortRefiNow.com in February, telling them to stop performing any and all acts for which a real estate license is required until such time as they obtain the required license.

The DRE said borrowers should contact their lender directly to try to work out an agreement or work with a nonprofit housing counselor.”