State Attorney General warns borrowers to avoid mortgage-related scams
UNIVERSITY PLACE – About a year ago, Irene Failor was on a ladder repairing her roof. Looking down, she watched a man walk up and nail a foreclosure notice to her house.
Irene lost her nest egg during the Great Recession. During good times, her investments produced about $1500 a month. Today, the stocks are worth nothing. The University Place home on which she relied as a backup investment saw its value collapse, too. A developer once offered $1.5 million to buy it. But during the recession its value slid to $267,000. Even with her salary as a nurse, Irene was unable to make the monthly payment on her underwater loan. She tried to work out new terms with her lender.
“The bank would not listen to me,” she says. “I asked for lower payments but they said no every time.”
Failor today joined Washington State Attorney General Rob McKenna at Consumer Credit Counseling/Apprisen Financial Advocates, a non-profit homeowner counseling center that specializes in helping borrowers work with lenders. Both Failor and McKenna hope to inform borrowers in similar situations that there’s light at the end of the tunnel.
“These are common themes we hear again and again,” McKenna said. “Loss of income, plunging home values -- the realities that thousands of people in our state deal with every day. But you don’t have to deal with it alone. Help really is just a phone call away.”
McKenna is promoting the Washington Homeownership Information Hotline, which connects struggling borrowers with counselors who help resolve unaffordable loans. McKenna used funds from settlements with mortgage lenders to help fund the hotline. His office was one of eight Attorney General’s Offices that helped negotiate the record settlement.
“Every story is a little different but each person who calls is in an incredibly stressful, scary situation,” said Charlie Helms, Northwest Regional President, Consumer Credit Counseling/Apprisen Financial Advocates. “There are few financial shocks as bad as facing foreclosure. That’s why we’re so proud to be able to help homeowners navigate these problems.”
According to RealtyTrac, which markets foreclosed properties, 1 in every 1,582 Washington state homes and condos received a foreclosure filing in March. In Pierce County, 1 in every 1,036 residences received such notices.
Ultimately, Apprisen helped Irene obtain a loan modification, slashing $1000 from her monthly payment. Apprisen counselors also helped Elbi Zarate, an Army veteran and postal worker who nearly lost his home in Lakewood. His wife, who works at a big-box retail store, saw her hours severely cut back during the recession. The home the Zarates bought in 2009 as first-time homebuyers fell into foreclosure. In November, 2011, a foreclosure notice was put on their door.
“We were waiting for the sheriff to knock on our door and take us out,” Zarate this week told an Attorney General’s Office staff member. “We had a hard time sleeping wondering when it would happen. We hoped it wouldn’t be when our grandchildren were visiting.”
Zarate says he was repeatedly declined for a loan modification. “Every time I called they had an excuse – usually a document they claimed I hadn’t sent.” Housing counselors eventually worked with his lender to obtain a monthly payment $150 less than before. It was enough to keep Zarate and his wife in the house.
McKenna today also warned local borrowers to watch out for mortgage-related scams. He says many companies and individuals search public records to find foreclosure notices and then contact borrowers with offers to help – for an upfront price. He suggests not waiting 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,” said McKenna. “Don’t accept any offer from someone 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 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.
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:
- Information about programs can be found on the Department of Financial Institutions Web site.
- Download the Washington Foreclosure Prevention Resources Guide (PDF), provided by the Seattle-King County Asset Building Collaborative Foreclosure Prevention Team, recommended by the Attorney General's Office and the Washington State Department of Financial Institutions.
- The Attorney General's Office has reached several settlements on behalf of homeowners. Check here to determine your eligibility for assistance.
- 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