State Attorney General warns borrowers to avoid mortgage-related scams
VANCOUVER – “I just started to accept that I was going to lose the house I raised my kids in – that I thought I’d spend my final years in,” Vancouver’s Jim Fleming explains.
Fleming today joined Washington State Attorney General Rob McKenna at Vancouver’s Community Housing Resource Center (CHRC). Both Fleming and McKenna hope to inform borrowers in similar situations that there’s light at the end of the tunnel.
When the successful real estate salesman’s elderly mom needed expensive nursing care in 2007, Fleming refinanced his home. Then the recession came, collapsing his home’s value and his real estate sales. Fleming watched his home equity go from 25 percent to zero and then into negative numbers.
“There are thousands of borrowers just like Jim all over the state,” said McKenna. “We’re here today to let people know that they have options – help really is just a phone call away.”
McKenna is promoting the Washington Homeownership Information Hotline and a similar operation on the other side of the Columbia River which connect struggling borrowers with counselors who help resolve unaffordable loans. In Washington state, McKenna used funds from settlements with mortgage lenders to help fund the state hotline. He intends to use funds from the $25 billion mortgage settlement announced earlier this year to bolster the helpline. His office was one of eight Attorney General’s Offices that helped negotiate the record settlement.
“Our goal is to help people hang on to their homes,” said Kevin Gillette, Executive Director of the CHRC. “In a lot of cases, we help obtain lower monthly payments. Regrettably, not every home can be saved. But in every situation, we help borrowers navigate an incredibly difficult challenge and come out in a better place.”
According to RealtyTrac, which markets foreclosed properties, 1 in every 1,582 Washington state homes and condos received a foreclosure filing in March. In Clark County, 1 in every 782 residences received such notices.
CHRC was able to negotiate lower monthly mortgage payments for Fleming – about $600 less than he was paying before. In the case of Jacqueline Freeman, a Vancouver farm owner, CHRC gave her enough information to negotiate directly with her lender.
"Dealing with my bank took many hours a week, repeatedly faxing paperwork they'd lost and negotiating feverishly," said Freeman. For a year we paid exactly as the bank requested but they redirected those payments into an escrow account rather than applying it to our mortgage. That put us on the foreclosure track. We felt deceived. It was tough trying to figure out what was true.”
Freeman ultimately went to a CHRC seminar and was able to develop her own roadmap for negotiating with her lender. “We finally had someone on our side,” she says. “Once we received honest advice, we were able to save our farm.”
McKenna today also warned local borrowers to watch out for mortgage-related scams. When Fleming was teetering on the edge of foreclosure, a letter arrived from someone claiming to represent a Florida law firm. The letter instructed Fleming to sign a contract and send $800 for the firm to represent him in a bid to modify his loan.
“I was despondent,” said Fleming. “I can understand how some people fall for that but I didn’t.”
McKenna says many companies and individuals search public records to find foreclosure notices and then contact borrowers with offers to help – for an upfront price.
“Don’t fall for it,” he says. “And don’t wait until a letter or e-mail offering help arrives. If you think you might be at risk of foreclosure, 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.”
Oregon borrowers may visit the HOPE NOW Website or call 888-995-HOPE to locate free mortgage help. HOPE NOW is an alliance between housing counselors, mortgage companies, investors, and others who hope to help keep people in their homes. Oregon Attorney General John Kroger was a strong supporter and co-signer of the national mortgage settlement.
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 Washington State 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.
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. CHRC 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