State Attorney General warns borrowers to avoid mortgage-related scams
BREMERTON – Al Davis has never piled up credit card bills, avoids lines of credit or even car loans. “I’ve always liked to save for what I want,” Davis this week told a staff member at the Attorney General’s Office.
But careful financial practices didn’t protect Al from being affected by the mortgage woes that have plagued the country and the state in recent years. Davis’s recession-battered employer, a local contractor, closed its doors in 2010. Then major heart surgery left him with more than $10,000 in out-of-pocket expenses. He found work but for much less pay. He started to miss some of the mortgage payments on his Bremerton home. Offers of help – for a fee – started to arrive after he received a foreclosure notice.
“They were coming left and right,” said Davis. “By mail, e-mail – any form of contact they could come up with.”
Washington State Attorney General Rob McKenna warns consumers about these kinds of offers. He says questionable operators scour public records to find foreclosure notices and then blanket struggling borrowers with deceptive offers.
“Unfortunately, there are many individuals and businesses trying to take advantage of people who are about to lose their homes,” said McKenna. “Do not accept offers of help that come with a price tag. Al did the right thing and contacted one of the many non-profits standing by to provide free help. "That’s what we encourage everyone to do."
McKenna was in town promoting the Washington Homeownership Information Hotline, which connects struggling borrowers with counselors, such as those at American Financial Solutions. The Bremerton non-profit helped Davis renegotiate his loan, saving him about $300 a month – enough to give him a shot at keeping his home. They also helped Bremerton’s Lighton Frazier, who ran into trouble when her family’s income dropped.
“I was in a very desperate situation,” said Frazier. “We applied for a modification four times. Each time it took months and each time we were rejected.”
American Financial Solutions helped save her about $450 a month through a loan modification. “We receive calls on a daily basis from borrowers dealing with a bunch of financial challenges all at once – job losses, overdue credit card bills and mortgage rates that are adjusting up,” said Barbara Mascarin, Director of Operations of the non-profit’s Bremerton office. “We want people to know they’re not alone and that help is available.”
McKenna used funds from settlements with mortgage lenders to help fund the Washington Homeownership Information Hotline. He says stories like Davis’s and Frazier’s are why his office spends so much time righting wrongs in the mortgage-lending industry. That work recently involved helping lead negotiations that resulted in a $25 billion settlement with the five biggest lenders.
McKenna noted that discussions are ongoing about how a portion – about $45 million – of Washington state’s proceeds from the settlement might help support programs such as those that provide homeowner counseling.
According to RealtyTrac, which markets foreclosed properties, 1 in every 1,582 Washington state homes and condos received a foreclosure filing in March. Trends in Kitsap County are marginally higher.
“The bottom line is that 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 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.
- Take advantage of free counseling and assistance. 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.
- 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