State Attorney General warns borrowers to avoid mortgage-related scams
KENNEWICK – In 2008, Burbank mom Aileen Eriksen (photo) began receiving postcards from businesses offering to help – for a fee – save her home from foreclosure. Eriksen figures they must have combed through public records showing which homes are in foreclosure.
“Especially when you have kids, it’s important to know that they have a secure place that they can call home — to be able to say, ‘We’re going home now’ and know where that home is,” said Eriksen.
Mike Zook was injured on the job in 2008. His income dropped from as high as $5,000 per month to just $1,000. Yet his mortgage payment was $1,100.
“I felt totally crushed that I couldn’t provide for my family,” Zook told an Attorney General’s Office staff member last week.
Washington State Attorney General Rob McKenna says stories like these are the reason his office spends so much time and resources righting wrongs in the mortgage-lending industry. That work most recently involved helping lead negotiations that resulted in a $25 billion settlement with the nation’s five biggest lenders. A federal judge on Friday formalized the record deal.
“We worked closely with the federal government and all 50 states with one goal in mind: helping people stay in their homes,” said McKenna.
McKenna visited Kennewick today in part to drive home the message that homeowners should avoid offers of help for an upfront fee and instead take advantage of free services from non-profit organizations approved by the Federal Department of Housing and Urban Development (HUD) and supported by grants from the Attorney General’s Office.
“We provided money from settlements with the big lenders to support programs that provide direct support to those at risk of losing their homes,” said McKenna. “For struggling homeowners -- if you think you’re at risk of losing your home, call the Washington State Homeownership Hotline at 1-877-894-HOME. Don’t accept any offer from anyone who wants you to pay for help obtaining a lower mortgage payment.”
McKenna’s office distributed $600,000 from a 2008 settlement with Countrywide/Bank of America and $550,000 from the Wachovia Wells Fargo settlement to assist the Homeownership Hotline. The service provides homeowners with HUD-approved counselors who walk borrowers through the process of finding out if their homes may be saved. Laurie Tufford, Regional Director of Partnerships, Apprisen/Consumer Credit Counseling Service, is one of those counselors.
“We are fortunate to work at a job where we can make a real difference in peoples’ lives." Tufford said. "The potential of losing a home is really devastating. That’s why we’re so proud when we help a borrower obtain lower payments.”
McKenna noted that discussions are ongoing about how a portion – about $45 million – of Washington state’s proceeds from the national mortgage settlement might help support programs such as the Washington Homeownership Resource Center, which runs the hotline for borrowers in trouble. Both Zook and Eriksen obtained lower mortgage payments, thanks to counselors at Apprisen/Consumer Credit Counseling Service, which is among the non-profits connected with the homeowner hotline.
McKenna warns that if a consumer faces foreclosure or the risk of foreclosure:
- Stay in your home and gather your financial documents. Print and complete a checklist of information you will need to have available for your lender.
- Request mediation: State law now requires lenders to notify borrowers prior to foreclosure of the availability of foreclosure counseling and the potential for mediation. Foreclosure mediation began on July 22, 2011. Homeowners who wish to participate in mediation must be referred by a housing counselor or an attorney. Information about the program is available at www.homeownership.wa.gov or download this handout (PDF).
- Contact your lender, who may be able to temporarily reduce or suspend your payments or help you refinance with a new loan and better terms. Look up contact information for lenders, loan servicers and Washington state banks and credit unions through the Hope Now Alliance site. Write down who you spoke with, the date and what was said. Use registered or certified mail in any correspondence on legal matters.
- Free counseling and assistance is also available to Washington residents. To be connected to a counselor, call the Washington Homeownership Information Hotline at 1-877-894-HOME (4663). They will be able talk to you about your situation, evaluate options, and explain assistance programs that may be available. You may also contact a Washington HUD-approved housing counseling agency.
- Review refinancing and modification programs available to assist you:
- Consider possible alternatives to foreclosure.
- Protect yourself and your home from scams and research any offer to help. The Washington State Department of Financial Institutions requires that any provider offering loan modifications be licensed as a loan originator, mortgage broker or consumer loan company. If you choose to go with a loan modification business, verify they have a license by checking the DFI Web site at www.dfi.wa.gov or by calling 1-877-RING-DFI.
- Don't walk away. Even if you lose your home, you may receive money. The market value of your home may have increased since you purchased it. Any unpaid loans or taxes will be withdrawn from the sale price of the house, as well as fees related to the foreclosure process. Whatever money is left after those debts are cleared up is rightfully yours. If you have abandoned the home, you may not receive this money.
Janelle Guthrie, Director of Communications, (360) 586-0725