The New York Times has an excellent feature on how a new crop of companies scamming consumers. So-called “loan modification” organizations charge homeowners up-front fees in the thousands of dollars to help them negotiate better terms with their lenders, and often fail to deliver.
Adding insult to injury, it seems many of these outfits are run by the same unscrupulous people who made a killing as subprime brokers.
In Charlotte, N.C., Joshua Garland telephoned FedMod in March after seeing one of its television commercials. Mr. Garland’s wife had been laid off from her hospital job. He had lost his job as a chef and was now bartending. Their monthly income had plunged from $3,200 to less than $1,000. They were already three months behind on their mortgage.
A FedMod agent confidently described how his company could cut their monthly payments from $1,200 to $532, Mr. Garland recalled. But first, he had to pay a $995 “retainer fee.”
This was nearly as much as Mr. Garland earned in two weeks. Dental bills were piling up for his three children. He was behind on his utilities.
“I told him, ‘We have $1,200 left to make our mortgage payment, and if we give that money to you, we’re going to get further behind,’ ” Mr. Garland recalled. “He said, ‘Go ahead and make the $995 payment, because once you’re under our plan, the bank can’t foreclose on you.’ ”
After several follow-up calls from the agent, Mr. Garland paid. Then, months passed with no contact from FedMod, he said. He left countless messages seeking updates, demanding a refund. His lender foreclosed on his house, scheduling a sale for Aug. 26.
The Federal Trade Commission has now begun taking action against these companies.
If the person you’re dealing with asks for payment upfront or guarantees results, be weary. A much better option is to visit hopenow.com or call 1-888-995-HOPE, where a HUD approved counseling agent will try to help you — for free.
