Facing Mortgage Default? Don’t be Scammed!

It is an outrage the number of people who are being scammed by phony mortgage default counseling services. I see it almost every day. Just today, another counselor in my office came to me with a case where the lady had paid a company $2800. She was behind on her mortgage and received a solicitation in the mail. The solicitation contained a form which looked like a government document. The form was a “009-S” and was called a “Payment Reduction Notification,” and said, “RE: HR5140 Economic Stimulus Act of 2008.”

This was totally phony. This company is not associated with the government and they are providing no service of any value. The lady responded to the solicitation and she was told that they could help her save her home. They also offered her legal services to save her house if such services were needed.

One often does need the assistance and guidance of a housing counselor in order to get a workout from one’s mortgage company. There are various factors involved in determining what workout may be available and the homeowner is often ill equipped to negotiate with the mortgage company. You do not need to pay for this service however; it is free. Secondly, Tennessee is a non-judicial foreclosure state and an attorney cannot help you save your home, except in the most extreme and rare of cases.

This lady ended up sending the mortgage company $2800. She has just lost that money and will not get it back. That $2800 could have went a long way toward a workout that would have helped save her home. This lady may or may not be able to file a chapter 13 bankruptcy and keep her house. It is too early to know what options might be available, but she was just ripped off of $2800 and without that money the prospect for avoiding loosing the home is a lot slimmer.

This is not an isolated case. I had one 89-year-old Black widow women who paid a company $800. We got her story on the local news and the “counseling agency” refunded her money. The reason she got her money back is that she had given the firm her bank account number and they took the money out of her bank account. Given the fact that the victim made such a good victim (elderly, Black, widow) and she claimed they took the money from her account without her permission, and that we got the story on TV, I assume the company thought it best to simply refund her money. Most people are not that lucky.

Last week, I served a client who had already filled out an information packet from one of these phony counseling agencies and already made out a check for $1600 to send to a company but luckily, on the advice of a friend, she called me first. We were able to negotiate a workout for her and she saved her home. If she would have sent the company the $1600 she would not have been able to afford a workout and would have most likely lost her home.

These phony mortgage default counseling companies solicit people by phone, by mail, by email, late-night TV infomercials and by knocking on a person’s door. There are several ways they can get the name of potential victims. They can get the names from the websites of the attorneys who handle the foreclosure or once a foreclosure notice is published they can get the information out of the newspaper. Another way is that they can purchase names from the credit bureaus. They establish certain parameters and then purchase the name of everyone who meets that profile. They may, for instance, purchase the name of everyone who is 60 days behind on their mortgage, or everyone who has been 30 behind for the last four months or so.

These companies are preying on desperate people. In addition to these scams there are also other more sophisticated scams, but the most popular scam is the phony counseling agency. Often the victim is the less educated or sophisticated but many intelligent, educated people also end up being victims. No one knows how widespread this is, but it is very widespread. Untold thousands of people are losing their homes when they could have saved them if they had gone to a legitimate housing counseling agency rather than a scam artist.

Legitimate housing counseling agencies are listed at this link: http://www.findaforeclosurecounselor.org/ . If you are in the Nashville area and need help call me, Rod Williams 850-3453. If elsewhere, use the above link and get help from a legitimate housing counselor. Please, help spread the word that legitimate free help is available. Please don’t let your friends or family fall victim to one of these cruel scams.

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