With today’s economic conditions and many people facing foreclosure on their homes, there are a number of scams in play. One of these is called ‘National Loan Restructuring’. No one wishes to lose their home and everyone wants to restructure their current mortgage with one that calls for lowering their monthly payments to one they can afford. Unfortunately, this type of scam has been fueled by various government announcements regarding restructuring a home loan.
In short, the way this scam works is that an individual will be contacted, often by telephone, with a message that they are working with Obama’s directive for lenders to restructure people’s mortgages. Unfortunately, many people think this is a legitimate company that will work with them to achieve the goal of saving a home from foreclosure. Emphasis is made that this directive is for a limited time only and one must act promptly to qualify for the program.
The contact this company uses what is called ‘cold calling’ which is done with a robot caller. The company actually has no information on anyone’s mortgage or their financial position. This robot caller makes the pitch about helping with a mortgage and then the person receiving the call is instructed to call the company directly.
A number of people have heard mention of Obama’s directive, but are in the dark as to how to implement it to help resolve their current situation. The idea that someone can relieve their problems regarding huge monthly mortgage payments and interest seems like the answer to their prayers regarding the possibility of saving their home but, in fact, it is a scam.
Unfortunately, this company, as well as others, take advantage of a person’s situation, collects an ‘up-front fee,’ and gives nothing in return. As a result, many thousands of dollars are paid out for what is called a mortgage-foreclosure consultation, loan-modification, or foreclosure-assistance service. It has been proven that none of these so called ‘foreclosure relief’ claims will do anything to assist consumers.
These companies claim that by auditing the mortgage to see if the lender is complying with state and federal mortgage-lending laws can help them negotiate with lenders on behalf of homeowners. They claim that by using this leverage it is possible to speed up the loan-modification process. There is no statistical data or other evidence that this will help homeowners or bring any foreclosure relief.
California’s Department of Real Estate (DRE) and the State Bar have issued a warning for Californians in order to help them avoid being involved with companies that make these claims. The Attorney General issued a warning for consumers to avoid forensic loan audits, the loan-modification industry’s latest phony foreclosure relief service and states that “The foreclosure-relief industry continues to be long on promises, but short on results”.
California’s law requires all individual and businesses offering mortgage-foreclosure consulting or other services of this type must register with the state and provide a $100,000 dollar bond. The law also states that it is illegal to require up-front fees for their services.
As a result, the state has shut down more than 30 fraudulent companies and applied criminal charges with lengthy prison sentences for a large number of consultants. In 2009 more than 2,000 complaints involving this scam were filed with the State’s Attorney General’s office, with nearly 350 individuals and companies issued a Desist and Refrain Order to stop their illegal activity.
With 22 percent of the nation involved in foreclosure activity and 632,573 California homes in foreclosure, the state has issued public warnings about these companies and their illegal practices. Non-profit housing counselors, which are certified by the U.S. Department of Housing and Urban Development, provide free help to homeowners and can be located on the Internet.