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September 18, 2018 You are here : How to spot a scam  >  Real Stories

Real Stories

Many homeowners have turned to loan modification or foreclosure "rescue" companies for help — only to get scammed. How did companies attract them? Learn from past victims, so you don't have to be.


Sixto Diaz migrated from Mexico to America in search of a better opportunity. He met and married his wife in California and they had three children. They wanted to give their children a home with a yard so they could run around and play. In 2005, they purchased a two bedroom, two bathroom home in Northridge, CA for $335,000. Finally, their dream of becoming homeowners had come true. In 2008, the dream became a nightmare when the mortgage payment increased, making it unaffordable. Around the same time, Sixto’s overtime hours were cut which caused even more of a hardship for the family. After working with Bank of America for over a year, Sixto was successful in receiving a loan modification that made his payments affordable.

Everything was going well for the family. Their mortgage was current, but the mortgage loan was upside down by over $100,000. Since the family purchased their home at the peak of the real estate market, when home values were inflated, the home’s value dropped drastically after the mortgage crisis.

Sixto loved his home but realized it was the investment that had gone wrong. In 2013, he reached out to West Coast Holdings to seek help. He went to ‘a professional’ to see if they could resolve his mortgage problem. He wanted to submit another loan modification so his payments wouldn’t continue to increase every year and also to change the terms to include paying principal in the monthly payment and not just the interest.

West Coast Holdings assured Sixto he would receive a loan modification if he paid them $3,000 and an additional $8,000 to get a principal reduction. Sixto couldn’t believe the amount. But believed them because they were the professionals. Sixto paid the $3,000 fee, and was instructed to stop making mortgage payments. He went into default with his servicer for two months in hopes that West Coast Holdings would be working on resolving his issue.

One year passed and West Coast Holding didn’t do anything for the Diaz family. They were scammed out of $3,000! They didn’t receive anything. Determined to go forward in 2014, Sixto called the HOPE hotline for guidance. They recommended that he call NHS of Los Angeles County for foreclosure prevention counseling. He enrolled in NHS’ foreclosure prevention clinic at the end of January and they opened a case to resolve his issue. They submitted a loan modification application along with a request for a principal, all at no cost because these services are free at NHS. Sixto was a little nervous at the clinic because he thought he was going to be scammed again, but after speaking to a counselor he felt at ease.

Like most homeowners, Haydee Campos was happy to be a homeowner and making her payments on time. But in fall 2009, she fell behind on her mortgage payments after she lost her job. She received a flyer in the mail from a company offering loan modification services. She trusted the company with the “official-looking” logo to help her save her home, not realizing the company was not affiliated with the government at all.

Ms. Campos contacted the company and a representative came to her home. After hearing the promises from the representative, she agreed to pay a $1,250 upfront fee to get help with her loan modification application. She needed help and the upfront fee seemed reasonable for the services and guarantees the company representative shared with her. The company verbally guaranteed results and they told her about a money-back guarantee if she did not get a loan modification to save her home from foreclosure. Like so many others, Ms. Campos did not realize that paying an upfront fee and getting guarantees or promises were signs of a scam, and felt protected because she signed a contract.

After some time passed, Ms. Campos got suspicious when she didn’t receive the loan modification she had hoped for nor receive any communication from her lender. After collecting some initial information, the loan modification company also stopped returning her calls. She soon realized that nothing had been done on her behalf, despite their promises to the contrary and the money she paid. Ms. Campos asked the company for a refund but they refused to return the $1,250 upfront fee she paid. Saving her home from foreclosure seemed to be more distant and she didn’t know where to turn.

After thinking she had run out of options, Ms. Campos found a local HUD-approved counseling agency that could help her - for free after attending a foreclosure prevention event sponsored by local non-profits and lenders. Through the counseling agency, Ms. Campos has been able to get a trial modification through Making Home Affordable, the federal program. She has also been able to file a scam report against the loan modification company, and recently won a small claims court settlement against them with the help of the Lawyer’s Committee for Civil Rights under Law. But most importantly, she has been able to save her home.

"They make you a lot of promises but in the end you don't get anything," she said of loan-modification companies.

Rita Santos was having trouble keeping up with her mortgage payments. When served with foreclosure papers in December 2008, she approached a financial company whose television advertisements promised foreclosure assistance.

The company told the single mother of a son with disabilities it could modify her home loan for a fee of $1,600. So Rita wrote a check for $600 to get the process started. But when she called the office to follow up, no one would take her calls. Her messages went unreturned for months.

My heart goes out to anyone who has been taken by these scam artists.

When she finally did hear back, it was a demand for the other $1,000—even though the company had nothing to show for the money and time Rita had already invested. "I was desperate," Rita recalls. "My heart goes out to anyone who has been taken by these scam artists."

Rita called the U.S. Department of Housing and Urban Development for advice. That’s how she found local NeighborWorks® America affiliate Centro Campesino Farmworker Center, Inc.—and discovered it's against the law for companies like the one she was working with to charge for loan modification assistance. Centro Campesino immediately began working with Rita, explaining step-by-step how to file for a loan modification on her own.

It took a detailed diary, notarized paperwork, two court extensions, even letters to state legislators, but Rita was approved in September 2009. Her home is safe, thanks to trusted advice from Centro Campesino and her own initiative.

"There’s help out there," Rita says. "But as the homeowner, you have to be prepared to do your part, too."

Doris Tinson knew her mortgage payments were too high when she refinanced her home. But the 74-year-old retired nurse needed to make improvements to a small rental property that she relied on for income. She was told she could rewrite the loan later.

After two years of just getting by, Doris called to lower her payments. She was told nothing could be done and felt like she was out of options. Then, on her way home from church, she saw a sign on the median promising loan modifications for a fee. She called the number after her nephew checked out the service online. "It looked like a real good company on the computer," Doris recalls.

The thought of my home being taken away is consuming. I can't get to sleep at night, and it's the first thing I think of when I wake up.

Not long after that call, a representative visited Doris. As advertised, he said his company would modify her loan. He left with nearly $2,000—a discounted payment because Doris referred two potential clients.

That was February 2009. Nothing happened for months afterward. Doris even went to the office, but she saw no signs of work being done on her behalf. In September 2009, her worst fears came true: She received notice that her house was being sold.

"The thought of my home being taken away is consuming," Doris says. "I can't get to sleep at night, and it’s the first thing I think of when I wake up."

With the loss of $2,000 and the potential to lose her home, Doris was desperate for trusted advice. Fortunately, she was referred to Los Angeles Neighborhood Housing Services, Inc. in October 2009. The NeighborWorks® America affiliate is currently working to help Doris keep the home where she has lived for 44 years.

Zulma Navarette has encountered not one but two loan modification scams. The 36-year-old Guatemalan native received unsolicited referrals to companies from a Spanish-speaking woman who had earlier helped her through the home-buying process. In both cases, Zulma was told not to talk to her bank directly.

Zulma first paid $2,000 to a company that promised to lower her mortgage payments but instead did nothing. Her bank called to explain her loan modification paperwork was incomplete and her payments would likely increase. The company told Zulma she still had to pay for services rendered. Only when she threatened to call the police did she receive a refund.

I was robbed. And I wanted my money back.

Two months later, the same woman advised Zulma that she was eligible for a loan modification, without back payments, through a local lawyer's office. The lawyer even offered a 100 percent money-back guarantee. So she paid $3,495 and waited. As instructed, she stopped making payments to her bank. Her paperwork, the lawyer said, was in progress. She just needed to be patient.

Finally, Zulma called her bank, only to learn that no one from the lawyer's office had been in touch. She had fallen even farther behind in her payments and would lose her home if she didn’t do something soon.

"I was robbed," Zulma says. "And I wanted my money back."

Zulma found help she could trust through Los Angeles Neighborhood Housing Services, Inc. Working with her bank, the NeighborWorks® America affiliate was able to get Zulma back on track and cut her mortgage payments in half. "It’s critical that people understand they should not pay money up front for loan modification services," she says. "It's important to do research and contact local housing and consumer affairs offices for help.".

Loan scammers target more than just homeowners struggling to pay their mortgage. California homeowner Jose Chirino knows that first hand. In November 2010, he received a call from New Century Solutions with an offer to do a forensic audit on his mortgage although he was current. New Century promised they could get Mr. Chirino’s lender to reduce his mortgage by hundreds of dollars. They claimed his mortgage contract was probably bad based on their experience with his lender. They also said once the errors were “uncovered” during the forensic audit, they could demand that the bank reduce his mortgage. Mr. Chirino thought the promise to get his mortgage reduced because of errors in his contract was an offer too good to refuse. He decided to let New Century Solutions conduct a forensic audit on his mortgage.
Mr. Chirino was told the New Century lawyers would work on his file. After that, he would receive information from his lender in about one month. The cost for the audit was $2,000, which he could do in easy installments. He paid the first installment of $1,000 to start the forensic audit process. He was told they found some errors on the mortgage contract. Next he paid the second installment of $500 to continue the audit. A month passed and he still hadn’t heard anything about the audit results. He called to check on the status but no one returned his calls. Something was wrong.

Mr. Chirino called his lender about the forensic audit status. To his surprise, New Century had never called the lender. In fact, his lender knew nothing about the forensic audit or any negotiations to reduce his mortgage. After talking to the lender, he made repeated calls to New Century but nothing happened. He paid $1500 and did not get what he was promised. He realized he was scammed and demanded that New Century refund his money. Despite his best efforts, New Century ignored his demand.

He needed help. He reached out to a local nonprofit, SurePath. They referred him to Law Foundation of Silicon Valley, an organization that could assist him reporting the scam and getting his money back. Working with the Fair Housing Law Project, a program of the Law Foundation of Silicon Valley, Mr. Chirino submitted a demand letter that detailed his claims. After repeated communications, New Century Solutions finally issued a full refund to him in July 2011. Now Mr. Chirino wants to make sure other homeowners do not get scammed.

Problems started for Ms. Brevard when her $1300 adjustable rate mortgage reset to a higher rate causing her mortgage payment to spike. To get help with lowering her mortgage, she reached out for help. She was happy when she found a company that would take over the mortgage while they worked out a lower payment for her. She signed the paperwork to lease her home from them, not realizing that she had actually signed over the deed to her home. She "leased" her home from them with the promise that she could buy it back later. It never happened. She "rented" her home from the company for about two years until she got suspicious and sought the advice of a lawyer.

The lawyer she sought referred her to another lawyer, who told her the lease-buyback was definitely a scam. He said she needed to move quickly to save her home. The lawyer asked Ms. Brevard for a retainer to get started on her loan modification and she signed the agreement right away. He told her he could save her home. He also told her to stop paying the lease-buyback scammers and to pay him instead while he worked out new payment arrangements. As part of his legal services, he said he would go to court and file motions on her behalf to keep her home out of foreclosure. During this time he advised her to stop opening mail from the lender and to forward any lender correspondence to him.

The lawyer scheduled to meet with Ms. Brevard for one of the filings at the county courthouse. Instead of meeting in the courthouse, they met in the courthouse parking lot which seemed odd to her. The lawyer had been disbarred but she was not aware of this at the time. As the lender letters continued to come, she grew increasingly nervous but the lawyer told her not to worry. One day while at work, her worst nightmare came true. She received calls from her neighbors saying that she had been evicted from the New Carrollton home she shared with her family. It was at this point that she realized her house had been foreclosed on.

She contacted her lawyer who told her it was a mistake and he was on his way to the courthouse to fix it. He said he would call her back. She called him when he did not call her back. He told her that her courthouse file was empty when he went to check it out. Ms. Brevard became very suspicious of her lawyer at this point. A few days later, she went to the courthouse to check for herself. Her heart dropped at the news she received. The court clerk told her the lawyer had never appeared on her behalf at the courthouse. She reviewed the foreclosure case on her house and realized the lawyer she hired was not listed on record so she requested a copy of the entire case. Not one motion had been filed despite repeated updates from the lawyer. At this point, Ms. Brevard realized she had been scammed. By the time the scam was discovered and reported to authorities, she had already paid $13,000 to the lawyer alone - and she had lost her New Carrollton, MD home. But she wants to make sure that other homeowners know the signs of a scam so they can protect themselves.

Twenty years ago, Pam Bellospirito and her husband Roger purchased their home in Centereach, Long Island where they raised their 5 children. In July 2008, the Bellospiritos were struggling to pay their mortgage and fell behind on payments due to medical issues. Mrs. Bellospirito turned to a friend who recommended that she get help in filing a loan modification and suggested that she contact a financial company in Centereach for assistance.

Mrs. Bellospirito went to the company in July 2008. When she visited their offices, they guaranteed they could modify her loan and help her family avoid foreclosure. The company representatives required her to sign a contract and pay them an upfront fee of $3,993. While Mrs. Bellospirito did not have the necessary funds, she borrowed the money from her family since the company's contract stated "in the event we are not able to successfully modify your mortgage we will return 100 percent of this fee."

While Mrs. Bellospirito is angry and saddened that a fraudulent company preyed on her during her greatest hour of need, she hopes that by sharing her story she can keep other families from suffering the same fate.

On July 31, 2008, Mrs. Bellospirito signed a contract with the company and ceased communications with her lender upon the loan modification company's specific instruction: "upon acceptance of funds, the client is to exterminate all communications with their lending institution unless otherwise authorized by the company; and any breach of this condition can jeopardize the company's negotiating proceedings and voids the aforementioned return policy."

Two months passed and Mrs. Bellospirito heard nothing from the company. In September 2008, she received court papers stating that her lender had filed a foreclosure action and a court date was set for later that year. She brought the papers to her contact at the loan modification company and he told her not to worry – he would handle the situation. Mrs. Bellospirito came to find out months later that the company had only contacted her mortgage company once in October 2008 and that the company did not appear in court on her behalf on the assigned court date. The Bellospiritos were being scammed.

In January 2009, Mrs. Bellospirito wrote a letter to the fraudulent company requesting a refund of her $3,993 fee. It was around this time that the Bellospiritos learned that they were losing their home. Mrs. Bellospirito began working with Community Development Corporation of Long Island (CDC) and loan modification papers were sent to their mortgage company. Mrs. Bellospirito's letter to the loan modification company went unanswered.

Since that time, Mrs. Bellospirito has taken the loan modification company to small claims court and has filed a formal complaint with the New York State Attorney General's office. She continues to wait for a refund. Fortunately, the Bellospiritos received a loan modification and saved their home from going into foreclosure through their work with CDC. While Mrs. Bellospirito is angry and saddened that a fraudulent company preyed on her during her greatest hour of need, she hopes that by sharing her story she can keep other families from suffering the same fate.

Alejandra Vargas came home to find an eviction notice on her front door. "I felt devastated," she says, "I didn’t know where to turn for help." She started with the address on the notice that threatened to take her home away.

I felt devastated. I didn’t know where to turn for help.

Alejandra took the day off from her part-time job—a financial burden in itself—and went in search of answers. But instead of finding a company or a representative, she found a mailbox. She asked the people in a nearby real estate office if they knew anything about the mystery address. "They told me they didn’t know about it, but that many others like me had come looking, too," she says. When they inquired about her situation, Alejandra was quick to explain. "I would have done anything to solve my problem."

Not surprisingly, the real estate firm told Alejandra exactly what she wanted to hear: They could help her, just as they had helped many other homeowners facing foreclosure. It was just a matter of time—and a $1,000 fee.

Alejandra now realizes she was deceived by a subtle but costly loan-modification scam. The real estate company lured her to its office to make money off her misfortune. In the end, Alejandra was able to save her home, but she knows most scam victims are not able to save their homes. As a result, she is eager to let others know that the same type of help she paid $1,000 for is available at no or low cost from HUD-approved counseling agencies. "These scammers are out there, and many homeowners are falling into their trap," Alejandra says. "I only wish I knew the facts sooner."

Jose Santander was not a victim of a loan modification scam. But he has certainly been a target.

For months, Jose was bombarded by special offers to help him modify his loan and save his home. He accumulated stacks of applications asking for sensitive financial information in return for lower mortgage payments. Some of the letters came disguised as legitimate resources—advertising assistance that appeared to be supported by "government" or "federal" housing programs.

These scam artists prey on people's fears and misfortunes. They are like lions waiting to pounce. Companies also pursued Jose aggressively by phone, tempting him with big promises. "They told me they could work out a low mortgage payment if I gave them $2,500 up front," he said. When one caller asked for his Social Security number, Jose quickly ended the discussion. "Fortunately, I knew not to share those details over the phone, especially with someone I didn’t know or have any past relationship with."

Jose reported the incident to Columbus (OH) Housing Partnership. Today, he remains vigilant and hopes more people will learn how to avoid being deceived by a loan modification scam. "I tell my family and friends to beware of companies and advertisements that make big promises," he said. "These scam artists prey on people's fears and misfortunes. They are like lions waiting to pounce."