by Gene Wunderlich
Over the years I’ve written repeatedly about fraud in the real estate industry in hopes that some of you might be spared the inconvenience of becoming victims. Many of you may remember the Stonewood scam that jumpstarted our local foreclosure market back in 2006. Before authorities would act on information from the Realtor Fraud Task Force, the scam grew to over $140 million and numerous individuals lost their life savings and their homes and banks were on the hook for millions. While some of the principles of that activity have plead guilty and are now testifying against their former partners, fraud has not abated but merely shifted to other targets.
As our housing market drags into its 6th year of misadventure, the number of homeowners in trouble has declined. But there are still millions with underwater mortgages, millions unemployed and millions vulnerable to the promise of a silver bullet to magically make everything OK. In California alone it is estimated that some 30% of homeowners owe more on their homes than they are worth. While recent housing price increases have acted to off-set some of that misery, continuing unemployment well above the national average puts more people on the cusp.
In one of the latest acts, the newly constituted Consumer Financial Protection Bureau (CFPB) recently shut down two California organizations, the National Legal Help Center and the Gordon Law Firm, that promised foreclosure relief and assistance renegotiating troubled mortgages but in actuality only bilked consumers out of some $10 million in a nationwide scam. In a warning accompanying the announcement, the CFPB also advised homeowners to be on the lookout for companies masquerading as government entities complete with governmental sounding names and logos.
CFPB Director Richard Cordray warned “We are especially concerned with those who misrepresent government programs or websites to divert distressed homeowners from needed assistance. Just because something has a government logo on it doesn’t mean that it’s legitimate. Mortgage assistance and foreclosure relief scams are designed to separate you from your money. They often emblazon their direct mail, email or other information with emblems, logos and names intended to mimic government agencies or programs, lawyers or law firms, or other legitimate operations.”
Recent fraudulent activity also prompted CFPB to offers red flags that signal when a ruse is likely in the works. Beware if anyone:
- Tells you to stop making mortgage loan payments. Not making your mortgage loan payments could hurt your credit score and limit your options.
- Tells you to start making payments to someone other than your servicer or lender.
- Asks you to pay high fees upfront to receive services.
- Promises to get you a loan modification.
- Asks you to sign over title to your property.
- Asks you to sign papers you do not understand.
- Pressures you to sign papers immediately.
You can learn if the company is bona fide and get help by calling (855) 411-2372 from 8 a.m. to 8 p.m. ET, Monday-Friday to be connected to a U.S. Department of Housing and Urban Development (HUD)-approved housing counselor.
If you think you’ve been scammed, report it immediately. The longer you wait, the more difficult it will be to prevent serious problems. You can contact:
- The California State Attorney General. (http://ag.ca.gov/)
- The Financial Fraud Enforcement Task Force. (http://www.stopfraud.gov/report.html)
The CFPB. (https://help.consumerfinance.gov)
- The Riverside County District Attorney. (http://www.rivcoda.org/)
But in spite of all this reporting and enforcement, there’s still only one person who can stop fraud in its tracks – YOU! Remember – if it sounds too good to be true…
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors.