News Release March 12, 2009 For Immediate Release LOS ANGELES- California Attorney General Edmund G. Brown Jr. today warned that scam artists have "sunk to a new low" and have used the forged letterhead of major lenders to con worried Californians into paying thousands of dollars for non-existent loan modification services.
"Scam artists have sunk to a new low and are using the forged letterhead of lenders to con worried Californians into handing over their hard-earned money," Attorney General Brown said. "Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home."
Attorney General Brown also advised consumers about seven steps they can take to protect themselves from loan modification fraud. (See below).
Today's warning comes on the heels of the arrest Wednesday of Anna Santos, 22, of North Hills - a key player in a loan modification scam using forged letterhead - on charges of money-laundering, conspiracy, and four-counts of grand theft.
Ms. Santos joined with members of the defunct First Gov loan modification ring in a separate criminal enterprise with a disturbing twist. They used forged mail and envelopes that appeared to be from victims' lenders.
Ms. Santos obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department." She opened several bank accounts and two post office boxes under that name. She and other members of the ring mailed flyers that appeared to be from victims' lenders or a government entity. The flyer used a large, bold header that read "Final Notice" and advised homeowners that they qualified for a special program to save their home from foreclosure.
After providing their mortgage information, homeowners received what appeared to be "confirmation" that the lender had been notified about the loan modification. Many victims also received loan modification documents that appeared to be from the victim's lender. The documents were of course forgeries.
The victims were informed they had been placed in a "probationary" program and their mortgage payments should be submitted to "Payment Processing Department" and sent to a given post office box address. None of the payments were credited to the victims' home loans.
Payments sent to the post office box were retrieved by Ms. Santos and deposited into the bank accounts she had opened. The money was then transferred to bank accounts held by other members of the ring.
Many victims paid over $6,000 to this loan modification scam.
Here's what homeowners can do to avoid becoming a victim:
- DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, new window, for review.
- DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.
- DON'T transfer titled or sell your house to the foreclosure rescuer. Fraudulent foreclosure consultants often promise that if the homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.
- DON'T pay money upfront to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect before 1) they give you a written contract describing the services they promise to proved and 2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.
- DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fradulent foreclosure consultants often keep the money for themselves.
- DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."
- DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.
- DO contact housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.
IF YOU TRANSFERRED YOUR PROPERTY OR PAID SOMEONE TO "RESCUE" YOU FROM FORECLOSURE, YOU MAY BE A VICTIM OF A CRIME.
Please file a complaint with the Attorney General's Office at the following address: Office of the Attorney General - Public Inquiry Unit, P.O. Box 944255, Sacramento, CA. 94244, or online at www.ag.ca.gov/consumers.
Lenders declare foreclosure halt TEMPORARY: Fannie Mae, Freddie Mac and others will give the Obama administration time to come up with a stabilization plan.
By ALAN ZIBEL
The Associated Press Sept. 8, 2008
This weekend, the U.S. Dept. of the Treasury placed Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), into a conservatorship. The federal government is authorized to take up to an 80 percent stake in the companies, and, as part of its duties under the conservatorship, will review both Fannie’s and Freddie’s financial condition quarterly, as well as inject money into the operations as needed.
Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend’s action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.
In light of the U.S. Dept. of the Treasury’s action, C.A.R. today reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles.
While the short-term impact of the Treasury’s actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.
Without an institutionalized mortgage-backed securities market, mortgage capital eventually will be less predictable and more expensive, and adjustable-rate mortgages could become the standard loan for home buyers, as could higher down payment requirements. The 30-year, fixed-rate mortgage as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in homeownership rates in California and across the nation.
C.A.R. is concerned that the Treasury, and Fannie Mae’s and Freddie Mac’s new CEOs, will overreact and change the mission and role of the GSEs. Wall Street and investors are understandably reluctant to buy mortgage backed securities (MBS) that are not either originated from or guaranteed by Fannie or Freddie.
The GSEs hold or have securitized nearly half -- roughly $5 trillion -- of all mortgages in the U.S., and in the current environment with private lender constraints, they account for the vast majority of all new mortgages in California.
We have just recently begun to see an increase in home sales, currently at nearly 490,000 units on an annualized basis, up from 284,000 in the fourth quarter of last year. The most significant, reliable source of home loans in California today are financed by either Fannie Mae or Freddie Mac. California ’s and the nation’s housing markets simply cannot withstand the financial rug being pulled out from beneath them. Additionally, the repercussions this could have on the already weak economy could be devastating.
C.A.R. is urging lawmakers to support continued government involvement in supporting the institutional secondary market and its role in creating homeownership opportunities. While we applaud the U.S. Dept. of the Treasury for increasing the GSEs portfolio limits, we will be asking Congress to enact legislation to ensure the two companies continue to fulfill their mission.
To help your clients understand the role of the GSEs, please take a look at a new video featuring C.A.R. Executive Vice President Joel Singer at http://www.car.org/newsstand/video-js-gse. In “Fannie and Freddie: Why They Matter to You,” Joel explains the often confusing but critical role Fannie Mae and Freddie Mac play in the housing market in clear and concise terms. I’m also featured in a new video developed especially for our members about the GSEs. You can find "Understanding Fannie and Freddie” on the car.org home page at www.car.org. I hope you find them useful. We’ll also be tracking the story for you as it develops in Wednesday’s “C.A.R. Newsline,” and will have additional information to help you make sense of the story for consumers in this Thursday’s edition of “Market Matters.”
Sincerely,
William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS®
WASHINGTON - The biggest players in the mortgage industry are halting home foreclosures while the Obama administration develops its plan to help struggling homeowners. The White House said President Barack Obama will outline in a speech in Arizona on Wednesday his much-anticipated plan to spend at least $50 billion to prevent foreclosures. Arizona is one of the states hardest hit by the crisis. Treasury Secretary Timothy Geithner announced Tuesday a revised effort to stabilize the financial system. It contained outlines of a foreclosure-relief effort but few details. Though lenders have beefed up their efforts to aid borrowers over the past year, their action hasn't kept up with the worst housing recession in decades. More than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007. Government-controlled mortgage finance companies Fannie Mae and Freddie Mac, and major banks JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. said Friday they are halting foreclosures through March 6. New York-based Citigroup Inc. said its halt will extend until the administration has completed the details of the loan modification program or March 12, whichever is earlier. Citi's action expands on a similar effort it started in November. The banks' pledges apply to owner-occupied homes, not those owned by investors. Fannie Mae said it was suspending all foreclosure sales and evictions for occupied properties, while Freddie Mac said its suspension would apply to properties with up to four units and noted that the ban would not apply to vacant properties. Both Fannie and Freddie had suspended foreclosure sales during the winter holidays and halted evictions from foreclosed properties through the end of this month. Together, they own or guarantee around half of U.S. home loans. Obama's announcement next week is expected to include details about how the administration plans to prod the mortgage industry to do a better job of modifying the terms of home loans so borrowers have lower monthly payments. Testifying before the House this week, Geithner said government would provide incentives to "try to induce economically sensible restructuring of mortgages" but offered no specifics. Howard Glaser, a mortgage industry consultant who served in the Clinton administration, said if 2 million borrowers' payments were lowered $500 a month, it would cost the government and lenders $6 billion each per year, assuming lenders match half the cost. Fannie and Freddie have developed systems to determine which loans need to be modified. To qualify for those programs, borrowers have to be at least three months behind on their home loans. The top executives of Bank of America, and Citi announced their intention to halt foreclosures under questioning Wednesday by House lawmakers. Jamie Dimon, JPMorgan's chief executive, detailed his plans in a letter to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who released it Friday. "We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages," Dimon wrote. 08:57 PM PST on Friday, February 13, 2009 |