We get so many calls from people who already have enough trouble trying to keep their homes - and then they give $2,500 to a loan modification company that does nothing. The newest tells her story and asks us to tell the people - again - to be careful out there.
"Not everyone out there has a heart of gold," she says, down $2,500, and getting the runaround when she's asking for her money back. They tell her it's a 60-day refund process. The doors are locked when she goes to visit the company in person.
"These guys are getting rich on other peoples' heartaches," she says.
They are. We did a lot on this subject a few weeks ago, telling people not to pay upfront. Let's reprint some of it in hopes others will see it and spare themselves the grief.
The California Department of Real Estate says this is what borrowers should know:
* If your lender has issued a notice of default against you (after you missed numerous payments) loan-modification companies cannot collect an advance fee, even if they have a real estate license.
* Lawyers are exempt and can charge an upfront fee if they are rendering legal services and operating under the scope of their licenses.
* If you haven't yet received a notice of default you can be charged an advance fee. But:
* The firm must provide an agreement for you to sign that explains what services will be performed, when they will be performed and what they will cost.
* And before you sign it, that agreement must have been sent to the Department of Real Estate for review and permission to collect upfront fees. Those fees must then be held in a trust account and only be spent on agreed-upon services.
Here is the page to see that list:
BUYERS SHOULD BEWARE OF EXTRAVAGANT CLAIMS:
When dealing with foreclosure and loan modification offers, be wary of this kind of language:
* "Stop foreclosure now."
* "We guarantee to stop you from foreclosure."
* "Keep your home. We know your home is scheduled to be sold. No problem."
* "We have special relationships with many banks that can speed up case approvals."
* "We can save your home. Guaranteed. Free consultation."
* "We stop foreclosures every day. Our team of professionals can stop yours this week."
Here are some things companies do or say that should raise red flags:
* Guarantees to stop the foreclosure process -- no matter your situation.
* Instructs you not to contact your lender, lawyer or credit or housing counselor.
* Collects a fee before providing any services.
* Tells you to make your mortgage payments to them rather than your lender.
Source: Federal Trade Commission
Here are some places that will help you with a loan modification without a fee:
* NeighborWorks Homeownership Center, Sacramento Region: (916) 452-5356; nwsac.org
* NeighborWorks America and Home Ownership Preservation Foundation national hot line: (888) 995-HOPE (4673).
* Home Loan Counseling Center of Sacramento: (916) 646-2005; hlcc.net
* ByDesign Financial Solutions, Sacramento (formerly Consumer Credit Counseling Service): (800) 750-2227; bydesignsolutions.org
* Sacramento Mutual Housing Association: (916) 453-8400, ext. 43. Staffers can accommodate those who speak Russian, Hmong, Vietnamese and Mien.
* California Senior Legal Hotline: (916) 551-2140 or (800) 222-1753; seniorlegalhotline.org. Staffers specialize in free loan counseling for senior citizens.