MS. REBECCA SHEIR
We'll stay on the subject of housing now, as we hear about some scams that are quite literally pushing some Washingtonians out in the cold. Legal experts say our region is among the worst in the nation when it comes to foreclosure rescue fraud. That's when desperate homeowners turn to a company that promises to save them from foreclosure. But that company is either fake or part of some larger scheme to steal your money or your home. Jennifer Strong has the story.
MS. JENNIFER STRONG
When Adrian Bernard broke up with his girlfriend, he lost their double income. Without it, he couldn't pay the mortgage on their Hyattsville condo.
MR. ADRIAN BERNARD
People were sending me things in the mail saying they could help me. And I finally tried one and the guy said he could help me get my mortgage like 2 percent fixed rate and everything. And I told him okay.
Bernard signed up for help modifying the terms of his mortgage with a company called The United States Law Center. He, like so many other homeowners, believed he was dealing with a counselor approved by the U.S. Department of Housing and Urban Development, or HUD.
He told me it would cost probably like $4000, I think. But he told me I could make a payment for $925 a month, so I made three payments.
Bernard says he was told to pay the Law Center instead of his mortgage company. That advice made matters worse.
The last payment that I was supposed to make, I was like they're still not helping me. And my mortgage people are still sending me stuff telling me I need to pay like almost $6000 or I'm going to have to go through foreclosure.
Then the Federal Trade Commission shut down The United States Law Center and seized its assets. Desperate to save the home he shares with his two-year old child, Bernard turned to another company for help.
I gave them $525 and every time I leave messages and call them they just never send me my money back or never answer me.
He'd been scammed, again. But believe it or not, he's one of the lucky ones. Bernard found Maryland Legal Aid before the bank foreclosed. Attorneys there helped him file for bankruptcy and keep his home. Lawrance Evans is with the Government Accountability Office. He says the federal government receives approximately 20,000 complaints about this kind of foreclosure fraud from each year and that number, it's probably a fraction of what's actually taking place.
MR. LAWRANCE EVANS
Complaint data may not accurately capture the total volume of this type of activity because people are embarrassed or sometimes they don't know that they have been scammed.
But how could you not know you've been scammed?
If I file for bankruptcy in your name, guess what? There's an automatic temporary stay on the foreclosure process. So if I do that without your knowledge, it appears that I have somehow pushed off the foreclosure.
He says the foreclosure eventually happens in most of these cases. It may be a surprise to the homeowner, but at that point there's little to be done.
But when the foreclosure actually happens, the bank has a legal right to seize the home. Right? So you've paid $5,000, maybe as much $15,000 in some cases. Those payments have gone to the scammer, but the claim on your house is real and it's a legal claim.
Both D.C. and Maryland are among the worst places in the nation for mortgage fraud. Marielle Macher is an attorney with the Washington Lawyers' Committee for Civil Rights and Urban Affairs.
MS. MARIELLE MACHER
There are a number of loan modification scam companies based locally that are still taking advantage of people, especially people living in Prince George's County, Md. There are scams all over the country that also are preying on people locally.
She says people find these scams online, in the mailbox like Adrian Bernard, and on signs posted along the road. Refusing to work with anyone who charges a fee to help with your mortgage is one way to avoid them. She says meeting with a true HUD counselor is free of charge.
In addition to the fact that you can get free help that's better than going to a company charging you upfront fees, upfront fees are generally illegal. There's a rule under federal law called the Mars Rule that prohibits these upfront fees, and it's also a violation of state law in D.C., Maryland and Virginia.
There's a backlog of unprocessed foreclosures in D.C. When the banks start seizing these properties, she says the number of frauds could sky rocket.
Foreclosures are eventually going to pick up in D.C. and the backlog is going to clear, and there are also going to be a ton of scams trying to take advantage of people. And there certainly are now too, because people in default are still looking for help, but we think that the problem is potentially going to explode as soon as foreclosures pick up a lot in D.C.
Meanwhile, the State's Attorney's office in Prince George's County says they're seeing yet another kind of fraud against homeowners. Scammers are breaking into vacant homes and gathering enough information to create false documents. These can be used to make fake loans against the property or even rent or sell the home to someone else. I'm Jennifer Strong.
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