Seeking home loan help, beware of scam artists

Con artists see opportunity in this crisis. Realtor Rebecca van Dahlen of Coldwell Banker Northern California's Morgan Hill office has seen many fraud victims and is outraged.

"Homeowners are driven to these scams because it's so difficult to get through the loan-modification process. It's more difficult than dealing with the DMV, it's more difficult is dealing with an insurance company," van Dahlen said. "I can't tell you how many homeowners I run into who have been scammed and it's just too late for them."

When homeowners apply for a loan modification, they start a frustrating, Byzantine process, van Dahlen told me: Lenders require homeowners to complete and return many complicated forms; lenders often lose submitted paperwork, then require homeowners to resend it. Information reported by one lender telephone representative frequently contradicts information given by the next representative with whom a homeowner speaks. Loan-modification applications are frequently rejected for vague reasons, homeowners are often told to apply for different programs and they start the cycle all over again. Meanwhile, their financial difficulties worsen.

Van Dahlen recounted one couple who had not missed a payment on their mortgage, but who was at risk due to reduced income. They applied for a loan modification but their lender declined stating that the couple had missed a deadline for returning paperwork. It was paperwork that they had submitted. When this frustrated, worried couple received a slick, official-looking brochure - it even sported the Housing and Urban Development (HUD) logo - in the mail from a company promising to help them through the loan-modification process, they were prime targets.

The company burnished its credibility by "waiving" any fees for their services and sending them lots of legitimate-looking forms to sign. The loan-modification service agreed to shepherd van Dahlen's clients through the loan-modification process. It filed paperwork with the couple's lender, and a few weeks later, notified the couple of their new mortgage payment, provided payment coupons, and directed them to send the new payment not to their lender, but to the loan-modification service.

Read the rest of the article at Gilroy Dispatch