Friday, February 13, 2009

Mortgage Modification Scams

During the bubble the housing market has become infested with scams. Well it probably always was a bit but it became very easy and lucrative during the good years. And with - between appraisers, realtors, mortgage brokers, and buyers the whole system s toxic. Now CBS has a video illustrating that even the mortgage modification and foreclosure rescue consultants are crooked. Lets take a look -

Watch CBS Videos Online

This is just one, but there we will hear about as the foreclosures and modifications continue to rise. And here are some snippets from the text version of the report titled Scams Rampant In Foreclosure Fraud Hotbed. Lets take a look -

Victims plead for help with operators at a government call center in Florida, a hotbed of foreclosure fraud.

"It's probably increased 20 to 30 percent over the last two or three months," said Scott Palmer, who works in the Florida Attorney General's office and oversees the call center.

Palmer says the growing number of scams target homeowners hoping to reduce their payments or avoid losing their homes, Keteyian reports.

That opened the door last year to companies like Outreach Housing of Fort Lauderdale, Fla., which made more than $2 million last year promising mortgage relief.

For homeowners the pitch went like this: They would pay Outreach Housing an upfront fee of about $1,200. They would then stop paying their lender and instead pay Outreach every month an amount equal to two-thirds of their monthly mortgage.

According to a lawsuit filed by Florida Attorney General Bill McCollum, Outreach Housing was engaged in a "systematic pattern" of "fraudulent," "unfair" and "deceptive" practices, leaving behind at least 600 victims.

This is taking place in Florida where the laws and requirements are well behind the criminal activity. But scams like this will be popping up other places. Be on the look-out.


beachdude said...

The most common mortgage modifications are listed below:

lowering the mortgage interest rate
reducing the mortgage principal balance
fixing adjustable interest rates within the mortgage
increasing the loan term throughout the mortgage
forgiveness of payment defaults and fees
or any combination of the above

Check out this public service site:

Anonymous said...

This story is a scam! Outreach Housing never claimed to work with lenders, they pass on the data to Law Firms who then sue the lenders on the homeowners behalf. Did anyone actually look into the company? They saved my home and I'm sure hundreds more. Do you research people.

NJHH said...

Sorry Anon but a few articles from a year ago do not really show much of anything.

Also if they were not working with the lenders why were they collecting money? Why would they tell people not to pay the lender but to pay them instead?

They just intermediaries between the law firms and the mortgage holders but having people pay them monthly instead?

Perhaps the company's intent was not to rip off homeowners but what exactly other than consolidating and forwarding info to lawyers did they do?

And did the clients actually understand the services they were paying for? Because we are not sure so from your site that we do.

PaulMolinaroEsq said...

Words from a Very Outspoken and Opinionated California Litigation Attorney (like there’s any other kind)

Here in California, our Department of Real Estate website (dub dub dub dot dre dot gov) lists the companies that have DRE "permission" to modify loans... add to this list any licensed California attorney, and that is where you should begin your due diligence search when you seek help in California. Other states probably have similar laws, so check with your own state DRE and state bar.

My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors... DON’T BE A VICTIM TWICE! What’s that they say, “Fool me once, shame on you, but fool me twice, and I’ll sue your butt!”

Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” Scammers are popping up like dandelions on a freshly mowed lawn in April. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere, not to mention spamming your email box with those third-world widows needing someone to receive three million dollars for them. Make no mistake, in many cases, these “loan modification experts” are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

In California, with very few exceptions (and attorneys are one exception… no coincidence there… attorneys make the laws), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.


Hire an attorney – and not just any attorney either - one with experience in mortgage law, not just one with real estate law experience but one with experience in both FEDERAL and STATE litigation against mortgage companies, one who doesn’t also do family law, criminal law, admiralty law, and immigration law as well, one who limits the practice to mortgage law (or at least a great majority of it), one who has the experienced staff, training, and know how to take on the big lenders and their top notch lawyers (lenders have attorneys – and darn good ones – check out their counsel on the web – big names top schools, shouldn’t you have a lawyer too?).

We are not talking about a refund on your broken television here, we are talking about hundreds of thousands of dollars and your HOME – if you don’t think this is the time to hire a highly educated and experienced professional instead of a weekend schooled, almost out of work, broker slash loan officer slash “expensive water in a wine bottle with alleged magical curative powers” salesperson, I don’t know what would make you take things seriously.

Of course, this is one obnoxious lawyer's totally biased opinion, but one based on many many distressing calls to my office every day. And, yes, my firm loves taking cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.

- Paul J. Molinaro, Esq.

Anonymous said...

Outreach Housing did the right thing, it was the corrupt Law Firms who took the money, took the records, did nothing and then blamed Outreach for it. And the news did not investigate the law firms, just repeated what the law firms fed them. Then the State stepped in and followed along. No investigation of the corrupt firms, just assume Outreach is a scam because the news said so. Here is a link to the history, look up the records in the court yourself. The truth is not being told.

I was successfully serviced by Outreach Housing, they filed my case in Federal Court just like they said they would, and so were hundreds of others. Bank settlement offers like 100K off the top and refinance the balance with a new 30 year fixed.

The law firms that screwed the customers are not even being investigated. The law firms took the money and did nothing. The law firms are the true scam artists here and nobody is investigating them.

Anonymous said...

Hey NJHH - How about this for facts, they posted actual records here

Face it, the news got it wrong! The Law Firms scammed everyone. Customers were ripped off by greedy independent law firm lawyers. Outreach was blamed for what the law firms did. The news didn't get the story right. The State jumped in and followed the news story. Doesn’t anyone investigate? If they did investigate they would find hundreds of customers were successful using Outreach Housing services.
Where is the story on the law firms that actually are getting away with criminal acts? The news and the State shut down a legitimate company, Outreach Housing, and did not even investigate the corrupt lawyers.

Disenfranchised Homeowners said...

NJHH said...

Disenfranchised - you may be right you may be wrong. But all your sources point to one place. Can you give us any other, recent, non Outreach Housing affiliated, place that states the same things you do?

We have no fight in this particular case - just reporting the reports and warning people about potential problems.

We do not like scammers - whether they are realtors, brokers, mortgage modification organizations, lawyers, etc.

And the write-up on the disenfranchised homeowners is confusing. Perhaps Firm A and Company B or something. And there must be something missing between 1 and 2. Company provides service? What services? And how does Firm get the stuff from the company? Does the Company deal any other firms or just the one that took money but did no work?

Disenfranchised Homeowners said...

NJHH - I respect your points we should all question statements, I agree. The site I pointed you to
has some of the court records. That is proof and you can verify it by going to the court case records. Each of the three lawsuits is listed.

The firms who absconded with money and records are The Real Estate Law Group RELG and Affirmative Defense Group ADG.

The service Outreach provided was two parts.

Part One was to the Homeowner. Outreach would perform a forensic audit of the settlement documents. They revealed their finding to the homeowner free of charge. If they believed there were violations, homeowners would signup and the information would be available to law firms.

Part Two was to the Law Firms. Outreach provided access to a customized web-based application that lawyers would access their client documents, interviews, public records, as well as allow the lawyers to generate any customized documents they would need. This system also managed calendars including court dates and attorney schedules and finally managed the “to do” list.

If a homeowner wanted to signup, a lawyer from independent law firm would review the information and commit to handle the case.

Outreach Housing was able to gather, sift, organize, and present a large number of homeowners to multiple firms. Because of the volume and presentation, law firms would agree to take these cases for just 350 per month.

What happened to Outreach was that they only had 2 firms who got greedy. RELG and ADG took almost 1000 records, did nothing for 4 months, and then returned all but 3 records back to Outreach. RELG took money (including “Trust Money” specifically deposited for individual homeowner court filings) and filed 3 cases. That’s all.

Outreach shut itself down for 4 months to straighten this out. They refunded homeowners even though they did not have to, in an effort to satisfy the homeowners that were ripped off by RELG. When Outreach started back up in December with 4 new law firms, they processed 130 new homeowners in 2 months. 100% of those homeowners are properly taken care of. Banks are recognizing their errors and making settlement offers to the lawyers. The system works.

But without an investigation, the State stepped in and shut down Outreach Housing. (Did I mention that some of the bad lawyers previously worked for the AG office)

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