If someone guarantees he can stop a home foreclosure, it’s probably fraud.
Take it as a red flag if that person wants to charge upfront fees and pressure you to sign paperwork or make payments to him.
And don’t believe anyone who says foreclosure scams aren’t real, Attorney General Catherine Cortez Masto said Tuesday at a news conference to kick off a monthlong campaign to stop foreclosure fraud in Nevada.
Her office received complaints against some 200 companies and has 14 criminal litigation files open against loan modification companies in Clark County, she said.
Foreclosure fraud has become an epidemic in Nevada, which leads the nation with one in every 71 households in some stage of foreclosure.
Masto, head of the Nevada Foreclosure Prevention Taskforce, outlined a number of free foreclosure assistance programs at the news conference, including a website from the city of Las Vegas.
"Educational outreach is so important to get materials and information out there to prevent foreclosure fraud, to talk about the warning signs," she said. "It’s against the law to guarantee a loan modification. I don’t want more victims coming to my office to file a complaint. There’s too much of that going on."
The attorney general’s mortgage fraud unit is prosecuting 51 cases with another 180 cases pending investigation. Convictions have been obtained against seven defendants, resulting in five felony convictions, one gross misdemeanor and one misdemeanor for mortgage fraud. Prosecutions have resulted in more than $270,000 in restitution paid to victims.
Masto said she’s only limited by her staff of two attorneys and four investigators in prosecuting foreclosure and mortgage fraud cases.
Las Vegas Councilman Steve Ross discussed the city’s new website, www.StopNVForeclosures.org, made possible by a grant from Fannie Mae. The site allows borrowers to complete a short online form and request assistance from a local HUD-approved counselor. There’s also the foreclosure hot line at 229-4663 or 877-448-4692 to find an approved counselor.
"We want to do everything we can to help people hurt by this crisis to access assistance early and avoid being victimized by fraudulent businesses that prey on them," he said.
Las Vegas homeowner Dwayne Green said he’s already thrown away close to $2,000 trying to get his loan modified. The foreclosure mediation process required by Nevada law is a "sham," he said.
"I’m one of the guinea pigs and I want to let the public know what’s going on," Green said. "It was not even a Bank of America representative. It was an attorney with no real estate experience. He gets on the phone (with the bank) for half an hour and couldn’t even get through. They just know what they’ll give you, take it or leave it. Why do you need a mediator? Where’s the neutrality?"
Preventing foreclosure fraud is a "daunting challenge," said Ken LoBene of the Housing and Urban Development office in Las Vegas. Nevada’s foreclosure campaign is the most comprehensive approach in the nation, he said.
The Nevada Foreclosure Prevention Taskforce is made up of the Attorney General’s Office; Las Vegas, Clark County and state government agencies; the U.S. Department of Housing and Urban Development; Fannie Mae; the Federal Reserve Bank of San Francisco; the Nevada Bankers Association; real estate agents; housing counselors and others.
Masto warned about promises of principal reductions, which most lenders are unwilling to do, and automatic refund scams in which the company charges $3,500 in advance, says it tried but couldn’t get the loan modified, then provides a partial refund of $350 and pockets the rest.
Another scam is the "phantom investor" purchase. The company says it will pay off the bank in exchange for the deed and allow you to stay in the home and rent it until you can buy it back later. Once it gets the deed, the company sells it to a pool of investors and refuses to deal with the original owner, Masto said.
Contact reporter Hubble Smith at email@example.com or 702-383-0491.Avoiding Foreclosure Scams
Work only with a nonprofit, HUD-approved counselor. Be sure the counseling agency is listed on the Department of Housing and Urban Development’s website, www.hud.gov.
Don’t pay an arm and a leg. You should not have to pay hundreds — or thousands — of dollars. Most HUD counselors provide services at little or no cost.
Be wary of guarantees. A reputable counselor will not guarantee to stop the foreclosure process, no matter what your circumstances are.
Know what you’re signing and be the one who signs it. Don’t sign paperwork you haven’t had a chance to read carefully or don’t understand. Don’t let the counselor fill out your forms.
Use an age-old axiom about trusting your instincts: If it sounds too good to be true, it probably is. Visit the Federal Trade Commission website at www.ftc.gov for more tips on spotting foreclosure rescue scams.
Source: Federal Reserve Board