Foreclosure isn't a four-letter word, but it does make homeowners vulnerable to scammers.
The D.C. region is among the worst in the nation when it comes to foreclosure rescue fraud. That's when desperate homeowners seek help from a company promising to save them from foreclosure. These companies are often fake, or part of a larger fraud.
Adrian Bernard signed up for help modifying the terms of the mortgage on his Hyattseville, Md., home 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 probably cost like $4000," Bernard says, "But he told me I could make a payment for $925 a month, so I made three payments."
Bernard says he was also told to pay the law center instead of his mortgage company, and that advice made matters worse.
"My mortgage people are still sending me stuff telling me I'm going to have to pay like almost $6000 or I'm going to have to go through foreclosure," he says.
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, Adrian Bernard turned to yet 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 answer me," he says.
He'd been scammed, again. But believe it or not, he is 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 from all over the country about this kind of foreclosure fraud each year.
Both D.C. and Maryland are ranked among the worst places in the nation for mortgage fraud.
"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.," says Marielle Macher, a Skadden Fellow and an attorney with the Washington Lawyers' Committee for Civil Rights and Urban Affairs.
Macher says there are also scams all over the country preying on people locally. She says people find these scams online, in the mailbox like Adrian Bernard, and on roadside signs.
Refusing to work with anyone who charges a fee to help with your mortgage is one way to avoid these scams. Macher 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 up front fees," she says, "Up-front fees are generally illegal. There's a rule under federal law that prohibits upfront fees, and it's also a violation of state law in Maryland, D.C., and Virginia."
There's a backlog of unprocessed foreclosures in D.C. When the banks start seizing these properties, Macher 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," she says, "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, especially people in nursing homes or recently deceased. Scammers are breaking into vacant houses 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.
[Music: "The Saltwater Room" by Cover All Stars from Owl City Instrumental Tribute]