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Is There a Wikipedia to Go Dark for Homeowners?
David M. Abromowitz
Senior Fellow at the Center for American Progress
Posted: 02/ 6/2012 5:44 pm
When Congress was on the brink of pushing through legislation that Internet advocates opposed, over four million online signatures were gathered quickly. Congress relented.
Today, millions of American households are poised to benefit directly from the opportunity to reduce mortgage payments, avoid foreclosure, build up some savings, or have a few thousand dollars to spend a little more freely. Yet while even conservative economists believe that easier refinancings will boost the economy and help millions more families — a major part of Congress is ready to say a big, “No, let’s not even try.”
Not a day elapsed after President Obama outlined a more ambitious set of proposals to let average families take advantage of the same low interest rates that have benefited upper income households and large corporations before Speaker Boehner among others declared the idea dead on arrival.
“All [the refinancing plan] does is delay the clearing of the market,” Speaker Boehner told reporters. “As soon as the market clears and we understand where the prices really are — [that] will be the most important thing we can do in order to improve home values around the country.”
Saying millions of families should wait until the “market clears” is the modern equivalent of “let them eat cake.” Clearing the market is an economist’s term for letting the tidal wave of foreclosures continue. But unchecked foreclosures drag down everyone’s home values, let vacant homes pile up in neighborhoods, and force families to choose between struggling to make needlessly high mortgage payments or become another default statistic with ruined credit.
It is time to ask lenders and investors to shoulder some of the burden, and Congress should be taking the lead on this, not finding objections. As my colleagues at the Center for American Progress and I explain in detail, the principles of accountability to avoid more foreclosures — especially for families who haven’t missed payments — is at the core of the administration’s expanded proposal for making refinancing easier.
Families with mortgages, however, are not an easily organized constituency. Unlike the protesters most engaged in social media who were the bulwark of those moved to criticize SOPA and PIPA, borrowers are not necessarily the internet generation nor an easily reached interest group.
But given the politics of “embrace the opposite of what Obama proposes,” homeowners struggling to keep making payments could use a Wiki dark day of their own. And so could the tens of millions of others who live next door, as no neighborhood really wants another foreclosure.
Related articles
- From Bad To Worse: Nevada Foreclosures Only Half Way Done (scoppcanton.wordpress.com)
- Should the Government Help Homeowners With Underwater Mortgages? (usnews.com)
Low Mortgage Rates — Finally Having Impact on Housing Market?
CIN Alert for January 24, 2012
Vicky and Joe had always dreamed of buying a nice neat home in a Northern city suburb. That dream came true in 1972 when they purchased a Cape Cod style three bedroom home for $45,000 with a 30-year fixed-rate mortgage of 7.5%.
Joe remembers telling Vicky at the time that they would never see rates that low again, and over most of the next 40 years he was right.
However, something quite unusual has happened during the past several years: mortgage rates have plummeted to new record low levels, most recently 3.88 %. Of course, Joe and Vicky, now retired, don’t need the low rates anymore, but for many others – including their kids and grandkids — those rates seem very inviting.
Inviting they may be, but the low rates have not thus far been able to trigger a strong stimulation of the US housing market as (sad to say) relatively few people qualified for the lower rates. High unemployment and small wage gains have made it harder for many people to qualify. Other would-be borrowers didn’t want to sink money into a home that they fear could lose value over the next few years.
However, new statistics just released would seem to indicate that things are beginning to change. Perhaps there is good news coming over the horizon.
“Existing home sales rose for the third consecutive month in December, according to data released Friday by the National Association of Realtors, which touts the upswing as a sign of recovery in the national housing market.
“Sales of existing homes rose to a seasonally adjusted rate of 4.42 million during the final month of the year, marking a 5% increase over the downwardly revised 4.39 million homes sold in November and a 4 percent increase over the 4.25 million homes sold in October.
“The number of homes sold in December 2011 also marked a 3.6 percent increase over the 4.45 million homes sold during the same month one year ago. “The pattern of home sales in recent months demonstrates a market in recovery,” NAR chief economist Lawrence Yun said in a statement. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.” (Source: The Washington Post)
Builders are hopeful that the low rates will boost sales even more as the year progresses. In fact, low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
Mortgage rates are one of the major issues your CIN editors monitor and report on regularly in our Housing Section, which is designed to provide information to prospective homebuyers, their counselors and advisors, lenders, developers, and others focused on the critical issues surrounding housing.
These include aspects of arranging financing and other details of the purchasing process, such as obtaining a fair appraisal of the value of the intended home. We also present information on various bank mortgage lending programs and mortgage banking programs to help borrowers understand the process they are entering as they select a home for purchase. Here’s a sample of some articles recently included in CIN’s Housing Section:
One million homeowners may get mortgage writedowns: U.S.
(Source: Reuters) About one million American homeowners would get write downs in the size of their mortgages under a proposed deal with banks over shady foreclosure practices. The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.
Do FHA Mortgage Borrowers Still Face Credit Score Layering?
(Source: Our Broker.com) More than a year has passed since HUD announced that it would investigate 22 lenders on possible ‘Layering’, the addition of requirements on top of FHA standards. The investigations are in response to 22 complaints the National Community Reinvestment Coalition (NCRC) filed with HUD alleging that the loan activities of the mortgage originators showed that their home lending practices deny FHA- insured loans to African-Americans and Latinos with credit scores as high as 640.
WSJ: Home Equity Squeeze Sparks Reverse Mortgage Revival
(Source: Reverse Mortgage Daily) The real-estate crunch left most home values with much to be desired, prompting a revival in reverse mortgages. Although the number of reverse mortgage endorsements has decreased compared to its peak a few years ago, lending has been picking up, with MetLife Bank’s 2011 reverse originations increasing by 171% compared to the previous year.
Confidence Among U.S. Homebuilders Climbs to Highest Since 2007
(Source: Bloomberg) Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved. The National Association of Home Builders/Wells Fargo sentiment gauge increased to 25 this month, exceeding the median forecast of economists surveyed by Bloomberg News and reaching the highest level since June 2007.
Feds investigating possible fraud at GE’s former subprime unit
(Source: i watch news) Federal authorities are investigating possible fraud at General Electric Co.’s former subprime mortgage arm amid increased public pressure to hold Wall Street accountable for its role in the financial crisis.
Mortgage, foreclosure issues top AG’s complaint list for the first time
(Source: Boston.com) Complaints about mortgage, loan modification and foreclosure issues soared in 2011 and were the biggest source of problems for consumers who asked the Massachusetts State Attorney General’s office for help.
COMMENTARY:
Why Falling Home Ownership Is a Good Thing
(Source: The Motley Fool) Commentator Dan Caplinger opines that falling levels of home ownership may not be such a bad thing, since for many, owning a home never made financial sense and avoiding the burden of having so much debt on one’s biggest asset can make financial life a lot easier.
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CIN Alert for January 12, 2012: 2011 Year in Review
CIN Alert for January 12, 2012
From the Editors: 2011 Year in Review
At each year end a favorite task for many editors is a look back at top stories of the “old” year” and in the early days of the new year sharing some highlights with readers. The choice of news items to highlight is usually sharpened as events throughout the past year put things in perspective, as to importance or “passing fad” items. Here are some of the hot issues of 2011 as your CIN editors saw them at the time.
How did we do in our trend-spotting? Send us your thoughts – and candidates for top stories of 2011. And what do you think the top stories of 2012 will be – let us know!
To start a look back at 2011: If you were keeping a scorecard on fiscal and housing issues during 2011, you would have needed extra paper and pencils (or in today’s world, lots of changes on those Excel spreadsheets).
The year was certainly filled with housing and economic news, including many twists and turns, as the US and global economies continued to struggle in an attempt to rise from the nagging Great Recession. (Still a top story for most of us in 2012).
The impact trickled down to virtually every household, every wage earner and every business during the year, and your CIN editors continued to provide timely information on a variety of important related subjects. Like Dave Letterman of late night fame and others, we have a Top 10 list of 2011 news and trends we will share with you over the coming issues of the newsletter.
Here is our choice for the top two trends of 2011 as we look back at our CIN Alert archives.
Hot Topic #1 – Is the American Dream Becoming a Nightmare?
As we brought the news in the issue of July 18, 2011. The day was perfect for early June: a bright blue sky, temperatures in the mid 80‘s and about 120 friends and family gathered around a village gazebo in the Southeast as Mike and Meredith tied the knot. There was just one thing wrong: the couple, who had dated for five years, recently learned that their plan to buy their own home a few months after they were married may be unraveling due to a proposed rule change by the federal government.
“The end of the American Dream as we know it may be near for millions of working families” said John Taylor, President & CEO of the National Community Reinvestment Coalition (NCRC). “At a time when our economy is fragile and our housing values have plummeted along come the regulatory agencies with a solution that will limit access to mortgages for millions of families. If regulators move forward with the current plan, it will block homeownership for millions of Americans, who will find themselves being punished for the mere fact that they are not wealthy.”
The plan which John Taylor referred to was a proposal regarding the definition of a Qualified Residential Mortgage which would require 20% down payments to get a loan. For young people like Mike and Meredith, with a modest income and minimal savings, there is no way they could come up with the $60,000 needed for the $300,000 home they’ve had their eyes on.
These are the type of critically important issues CIN editors explore every day in our Housing Section. For as long as our nation has existed the dream of homeownership has been a primary motivating force for individuals and families. Thanks to far-sighted public sector programs – such as the GI Bill for returning WWII veterans, federal tax deductibility for mortgage interest, and FHA or other government guarantees of mortgages – the rate of homeownership has now passed the 70 % mark in the United States.
In theory, everyone today who earns a salary should be able to buy a home of his or her own. However the impact of the recession combined with the proposed down payment rule change could place first time homeownership in jeopardy for millions of families. CIN stays abreast of this and many other housing-related issues with fresh new material and updates posted every day.
Hot Topic #2: How’s Business Down on Main Street?
In the issue dated August 1, 2011 we brought you news of small business. Sharon had always dreamed of owning her own small furniture store. Her parents had owned and operated a hardware store downtown for three decades, and she had plenty of retail experience, good and bad, helping them out as she grew up. However, upon graduation from high school, Sharon decided to major in education, eventually landing a teaching job at a nearby high school.
Even though she had a successful 12-year run as an English teacher, her desire to own a store never completely went away. It was at the high school’s graduation awards ceremony four years ago when one of the parents told her they were looking to sell the small furniture store they operated in a community about 15 miles away.
Sharon had been able to save up some money while teaching, plus as an only child, she had received a significant portion of her parent’s estate. She viewed this as a once in a lifetime opportunity. If she could cobble together the needed funds, she would buy the store, tidy up the building and focus on selling the type of furniture the big stores often ignored.
Three years later, her Main Street business is doing quite well, even in the midst of the economic recession. Meanwhile, Rod’s carpet shop across the street shut its doors for good last year, and Larry, the jeweler next door, is barely getting by. These are tough times, to be sure, but Sharon is a very hands-on owner, with extensive knowledge about every aspect of the business.
Is her success story the exception rather than the rule? Maybe not. According to a recent study, women owned small businesses are faring better than those owned by men. Findings indicate that, this past quarter, women-owned small businesses seem to be rebounding faster out of the recession than those owned by men.
CIN presented this article prominently in our Small Business Section — the place where such news, information, research and perspective can be shared to benefit local communities and our precious hometowns.
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What developments and issues will be in focus as we enter the year 2012? None of us know for sure, but you can be certain that CIN will be here to present pertinent news, commentary and trends for you 24/7!
What were your top stories for 2011? Please let us know – and while you are thinking about it, what might the 2012 top stories be? What trends are you watching?
80 Percent Of Homeowners Behind On Mortgage Ineligible For Loan Modification Program
Less than 20 percent of homeowners who theoretically qualify for a government mortgage modification are actually eligible, according to data released Monday by the Treasury Department.
Although roughly 4.6 million U.S. homeowners have missed at least two mortgage payments — making them technically eligible for Making Home Affordable, the federal government’s flagship homeowner assistance program — a whopping 80 percent of those borrowers cannot be helped by the program. According to the Treasury report, just 900,000 homeowners actually qualify for a loan modification under Making Home Affordable.
Dean Baker, an economist and co-director of the Center for Economic and Policy Research, said that fact reflects the program’s low goals. “If 900,000 are eligible, and this is your main program for helping underwater borrowers, and we know that not all 900,000 can be helped, this doesn’t look very ambitious,” he said.
The numbers reinforce just how far short the program, initiated by President Barack Obama with much fanfare in early 2009, has fallen short of its goals and fuel critics’ assertions that the program is largely ineffective. “This program, in its design, is set up to help a very small portion of people,” said Baker.
(Under Making Home Affordable, homeowners who aren’t yet delinquent in mortgage payments but are at risk of imminent default might also qualify for loan modifications. The Treasury data did not include that population.)
Borrowers are locked out of the federal program for a myriad of reasons, including the kind of loan they have and the property at issue. Not covered by the program: rental properties, “manufactured” homes, homes with Federal Housing Administration loans, and homes with Department of Veteran Affairs loans.
Many borrowers can’t get help because their monthly mortgage payment is deemed affordable, irrespective of whether it actually is for the borrower. The idea behind the loan modification program is to make the monthly mortgage payment more affordable, defined as a payment that is less than 31 percent of the borrower’s total monthly debt payments (think car payments, student loans, credit cards, etc.). One-third of homeowners who would otherwise qualify are ineligible because they already have a mortgage payment that meets this criteria, according to the Treasury report.
Borrowers who have abandoned their property are also ineligible, the assumption being that they are not committed to their home.
“If you look at the large number of vacant properties, I think that speaks to the fact that, in many cases, the borrowers were reached too late in the game,” said Baker. “The borrower assumed they’d lose their home so they walked away. You could say those people aren’t eligible, but they might have been if we’d reached them earlier.”
Source: Treasury Department report.
Related articles
- Example of the Hardship Letter For Loan Modi – Vinh, Vietnam (travelpod.com)
- Nearly 900,000 HAMP Loan Modifications In Q3 (avidlawblog.wordpress.com)
- Real Estate and Loan Modification Professionals Sponsoring Free Loan Modification Webinars (prweb.com)
Making Those Mortgage Payments May Pay Off – After All
CIN Alert for November 1, 2011
The last 18 months have been rough for Dana. Sad to say, in the midst of the continuing Great Recession, she and her husband of three years have parted company. He’s not willing to help her at all, so she now has full responsibility for raising two toddlers and maintaining her job as a restaurant manager, while also paying the mortgage on their modest two-story home each month. There have been months when money has been so tight she’s had to ask her Mom to help out. Still, through all the adversity, Dana has managed to make her monthly mortgage payments on time. She’s never missed a payment, nor even been late.
Unfortunately, the value of her home has plunged from what it was when she purchased it in 2007, so she now finds herself in the same position as many other homeowners do today: upside down with a mortgage rate much higher than today’s going rates. Until now, there has been no way she could refinance or modify her mortgage loan to relieve some of the fiscal pressure she faces every month. However, there are signs that maybe — finally – there could be light at the end of the tunnel for Dana and millions of other Americans in the same boat underwater:
“The Obama Administration is launching yet another high-profile campaign to shore up the housing market — and with it, the economy — by making it easier for some struggling homeowners to refinance underwater mortgage loans at today’s ultra-low interest rates.
The federal government’s new rules will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation’s housing crisis, with the hitch that they can’t have missed any mortgage payments for the last six months.
The plan could help 1 million to 2 million people get significantly lower monthly payments in hopes of stabilizing the real estate market. On top of that, it would boost the economy by putting about $2,500 more in a typical homeowner’s pocket each year, administration officials said. The plan amounts to a sweeping overhaul of the 2½-year-old Home Affordable Refinance Program, easing rules and reducing fees to allow many more homeowners potentially to take advantage of historically low mortgage rates.
The revisions include lifting a ceiling that barred participation by borrowers who owed more than 125% of the value of their homes, and using a controversial modeling method to replace costly appraisals that are among the fees that have kept some homeowners from refinancing. About 14.6 million mortgages nationwide were underwater at the end of the first quarter, about 29% of the nearly 51 million residential mortgages nationwide, according to Moody’s Analytics and Equifax.” (Source: Los Angeles Times)
Will these steps help? Stay tuned. Buying and maintaining a home can be a very emotional process for families. This is the largest purchase most individuals will make — and one with long-lasting effects. The home purchase process can also be confusing, and the terms of the loans offered are not always understandable for most of us (remember all the pages at closing!). It’s especially crucial in today’s economy that homeowners be aware of all the options available to them, and to avoid those deals that “sound too good to be true.” The results of the Obama Executive Orders will be seen in the weeks ahead.
Meantime, there are millions of homeowners today in desperate need of assistance with their housing issues. The CIN editors are watching many developments for you.
CIN’s Housing Section is a dependable reference tool for current and prospective homeowners. Information is updated on a daily basis. We offer details on various bank mortgage lending programs and mortgage banking programs to help borrowers understand the process they are entering as they select a home for purchase, or ways to maintain/refinance their home after purchase. It seems hardly a day goes by without another dramatic development. Consider these recent examples:
Mortgage refinancing to get easier under revised U.S. program
(Source: Los Angeles Times) New rules being implemented by the federal government will encourage borrowers to secure new loans no matter how much value their homes have lost during the nation’s housing crisis.
Obama looks to bypass Congress with help for homeowners, students
(Christian Science Monitor) President Obama is bypassing Congress and using executive powers to enact change. Strapped homeowners and indebted students are first in line under his relief plan.
SHRA to expand program to buy, rehab and resell foreclosed properties
(Source: Sacramento Press) The Sacramento Housing and Redevelopment Agency can now grant developers a first look at foreclosed properties for rehab and resale in Sacramento’s low- and moderate-income neighborhoods – before the properties are put on the open market. Through the new program developers can purchase vacant, foreclosed properties at discounted prices and then rehabilitate and resell those properties.
Cost of Fannie & Freddie bailouts trimmed
(Source: CNN Money) The cost to taxpayers for bailing out mortgage finance giants Fannie Mae and Freddie Mac won’t be quite as bad as previous estimates.
The FHA now estimates that the net cost of the bailouts through 2014 will be about $124 billion, down about 19% from an estimate of $154 billion a year ago.
Reverse Mortgages to be Scrutinized
(Source: Mortgage Loan.com) Older borrowers are getting a new resource to assist them with reverse mortgages and other financial matters, courtesy of the new Consumer Financial Protection Bureau (CFPB). The Office of Financial Protection for Older Americans is one of several entities being established under the new bureau, with the goal of promoting financial literacy among Americans age 62 and over, and protecting them from unfair and abusive practices regarding financial decisions.
Senate Adopts Measure to Increase Fannie, Freddie Loan Limits
(Source: Bloomberg) The U.S. Senate has adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.
Related articles
- The Pros & Cons of Reverse Mortgages (orangecountymortgage.co)
- National Mortgage Complaint Center Warns Homeowners About Mortgage Refinance Scams & Explains How Homeowners About To Refinance Can Save Money (prweb.com)
- Freddie Mac seeks $6 billion more in aid (bottomline.msnbc.msn.com)
Mortgage Relief Scams Proliferate After Recession
Image via Wikipedia
Janell Ross
Janell.Ross@huffingtonpost.com
First Posted: 9/26/11 08:29 AM ET
Updated: 9/26/11 05:11 PM ET
From the looks of the mortgage relief companies Christopher Mallett has marketed in recent years, offering lower payments and new loan terms to troubled homeowners, one might easily get the impression that he has the backing of the federal government or is running non-profit help groups.
Mallett is the driving force behind usbankloanmodiication-gov.info and mortgagehelpgov.us. He also founded The Department of Consumer Services Protection, U.S. Debt Care, the U.S. Mortgage Relief Council and several other operations with similarly authoritative if not auspicious-sounding names. But people who turned to them for help didn’t receive services, according to court documents filed by the Federal Trade Commission in U.S. District Court this month. Their names were instead sold to companies that almost universally scam distressed homeowners, federal regulators say.
Consumer advocates inside and outside the federal government say Mallett appears to be part of a rapidly growing network of customer lead generation, foreclosure rescue and debt settlement companies aggressively marketing their services to a crop of cash-strapped consumers that’s grown out of the housing crisis. Many of these companies break the law by portraying themselves as agents or partners of the federal government and by guaranteeing relief that they fail to deliver, FTC officials said.
In the last three years, The FTC has accused Mallett and nearly 40 other company owners of deceiving consumers about foreclosure prevention services. This year alone, attorneys general in Virginia, Idaho, Ohio, Michigan and North Carolina have brought cases against foreclosure rescue companies. In most cases, the companies collected up front fees for their services. That practice has been banned by the FTC since January. But new mortgage relief services are constantly evolving.
“That’s the thing here, a lot of the people running these scams are incredibly smart,” said Andrew Pizor, a staff attorney with the National Consumer Law Center. “The scams are often sophisticated. It is not like an armed robbery where you know immediately what’s happened. I mean, one of these companies is run by a group of Ivy League graduates.”
In fact, state and federal regulators say that some of the same people who sold risky, even predatory loans to consumers have moved on to the business of for-profit loan modifications. In California, one company that sold home loans to people with subpar credit during the boom — Pacific First Mortgage — transformed itself into a mortgage relief operation once the mortgage crisis began, The New York Times reported. Pacific First became the Federal Loan Modification Law Center and offered its services to distressed homeowners. The FTC shut it down in 2010. In Maryland, some out of work mortgage brokers have been approached with requests to buy their client lists, regulators say. And, there is evidence that lead generators often sell to multiple companies that purport to help people with various kinds of financial distress — credit card debt, past due mortgages, homeowners who are underwater, student loan defaults, FTC officials said.
Mallett, a San Antonio businessman, could not be reached for comment Thursday, when the FTC announced that the case had been filed. Telephone numbers at his home were disconnected and several of the websites the FTC says Mallett operates could not be accessed. The FTC is seeking a temporary court order to shut down Mallet’s websites and stop his companies from doing business until a court can decide if they should be permanently shuttered.
In the years leading up to the recession when foreclosures were rare but home values were climbing in many markets, some mortgage relief operations were structured to trick homeowners into signing over their property deeds in exchange for loans equal to the amount of past-due payments, Pizor said. Most of these homes were later sold by mortgage relief companies at a profit. The distressed borrowers were simply evicted.
By 2006, homeowners throughout the country were not just behind on their payments but owed lenders more than their homes were worth. So, many of these same operations began to claim they would negotiate with lenders directly to modify the terms of distressed homeowners’ mortgages. Clients were encouraged to stop paying, and in some cases, communicating with their lenders directly. Instead, distressed homeowners were told to make payments through foreclosure rescue companies. In most cases little or no effort was made on behalf of these consumers, Pizor said.
And now, in the wake of the robo-signing scandal that exposed several major mortgage lenders’ shoddy document practices , a group of self-styled “forensic loan auditors” have cropped up. These businesses promise that they can stop a foreclosure or force banks to renegotiate the terms of a loan by finding irregularities or evidence of predatory lending in a distressed homeowners’ purchase agreement. In most cases, these companies don’t have staff with the financial or legal expertise to identify actionable problems in a mortgage, Pizor said. So, customers are simply wasting their money.
“I think it is fair to say that there has been a real proliferation (of scams) within the last couple of years,” said Reilly Dolan, the assistant director for the FTC’s financial practices division.
The FTC has created a pair of consumer advisories for people facing mortgage difficulties or other debt problems. Several sources also suggested that consumers are often better off attempting to directly negotiate a mortgage modification or other debt settlements with lenders. Those who need help should work with a HUD-certified counselor or a nonprofit debt counseling agency, Dolan said.
But trying to negotiate a mortgage modification is often a difficult process. Two years after a legitimate federal program began, only about 500,000 borrowers have seen their mortgages permanently modified, ProPublica and the PBS NewsHour reported in March.
In 2009, the FTC announced plans to work closely with state regulators to “crackdown on fraud and deception by mortgage modification and home foreclosure rescue companies.” As a part of that crackdown, the FTC issued 71 warning letters to companies across the United States and states issued another 60 to companies suspected of illegal mortgage related activities, according to an agency press release.
At least one FTC case highlighted how branding can leave consumers with the false impression that companies are associated with the federal government or set up to assist consumers.
In 2009, the FTC shut down California-based Nation’s Home Modification Center, a company that claimed it could help stop foreclosures. The company’s solicitation letters indicated that “due to the current foreclosure crisis,” Congress had “enacted a law allowing Nation’s Home Modification Center to provide relief” for homeowners delinquent on their mortgages. These letters arrived in envelopes bearing a watermark in the shape of the U.S. Capitol dome and an address in Washington, D.C.’s Capitol Hill neighborhood. The company also did business as The Federal Housing Modification Department, Inc. and The Loan Modification Reform Association. The FTC settled the case, and a federal court order banned the companies and their owners from offering mortgage assistance services again.
“We’ve seen ads with U.S. Flags, ads with President Obama’s picture and ads with language that says things like ‘This is the President’s plan to help you avoid foreclosure’,” said Anne Balcer Norton, the Maryland Department of Labor Licensing and Regulation’s Deputy Commissioner of Financial Regulation.
People who are in serious financial trouble in Maryland and states around the country are being targeted and tracked by lead generation, foreclosure rescue and debt modification companies based inside and outside the United States, Balcer Norton said.
“What these companies do is play on the fact that when people are facing the loss of their home, this is not just a financial problem,” said Balcer Norton, “it is an incredibly emotional, upsetting experience. As a state regulator you sort of know that that things have gone wild and people are really being aggressively targeted when you find yourself issuing subpoenas for records (in the United States offices of companies based) in Australia.”
Since the housing crisis began, nearly half the victims of mortgage loan modification scams are of African American, Hispanic, or Asian descent, according to a May study released by the Homeownership Preservation Foundation, a nonprofit that works with distressed homeowners.
In a few sections of Prince George’s County, Md. — a predominantly black and mostly affluent community outside Washington, D.C., where nearly 25 percent of homes were in foreclosure or default in August — entire street light posts are wallpapered at eye view level with ads claiming that one company or another can secure a mortgage modification or stop a foreclosure. In some of the county’s less affluent areas, the medians that divide major thoroughfares and mark the turn offs into neighborhoods have sprouted a bumper yield of signs. Some are handwritten that encourage people to call a particular number so “they can’t take your home,” others that look professionally printed, include glossy images of Barack Obama and claims that “The President has commissioned” a specific business to help “save your home.”
Ads also run regularly on gospel and hip-hop radio stations and in Spanish language newspapers that outright promise a foreclosure can be stopped or a loan payment amount reduced. This week, one ad in El Tiempo Latino, a Spanish –language paper distributed in Prince George’s County, claimed that a company could “convert” loans to “fixed-interest” agreements, “reduce monthly mortgage payments,” get lenders to “extend payment terms to 30 or 40 years,” or “add” past due amounts to the “existing loan.” The ad appears between pitches for insurance companies, childcare centers and services that power wash decks or maintain lawns.
But foreclosure rescue companies have not limited their work to black or Latino areas, Balcer Norton said.
In it’s 2010 poll of state-level consumer protection agencies, mortgage-related fraud, credit repair and debt relief services were the second most frequent source of public complaints, according to a July 2011 report released by the Consumer Federation of America. Only complaints related to car sales and repair were more frequent. And across the country, the majority — 56 percent — of the people who lost their homes to foreclosure during the height of the crisis were non-Hispanic whites, a 2010 Center for Responsible Lending report found.
“Really, it’s almost impossible to know just how many people have been sucked in and victimized by any one of these schemes,” said Pizor.
It is also not clear how many names that Mallett may have collected and passed along since setting up his operations in 2008, Dolan said. What federal regulators do know is that Mallett may have won some consumer’s trust with bold creativity.
Several of Mallett’s websites prominently displayed the Federal Trade Commission’s seal and offered advice on “avoiding scams.”
Related articles
- Homeowners Beware: Mortgage Mod Scammers Are Selling an Audit to Nowhere (dailyfinance.com)
- FTC Targets Mortgage and Debt Relief Websites (pcworld.com)
- Are Temporary Loan And Mortgage Modifications A Scam? (timothymccandless.wordpress.com)
- FTC Will Not Enforce Provisions of MARS Rule Against Real Estate Professionals Helping Consumers Obtain Short Sales (ftc.gov)
- For homeowners in trouble, a tough decision to make (taxlienbids.com)
- Latest FTC Shutdown of Financial Scams (askthemoneycoach.com)
- Reverse Mortgages Can Be A Scam (financialelderabuse.wordpress.com)
Building Community, One Household at a Time 