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Slam door on mortgage sleaze

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Comment from Philadelphia Inquirer

The Tampa Tribune

Published: October 10, 2009

Many of the same sleazy operators who helped fuel the real estate bubble through dubious subprime lending practices are now taking advantage of homeowners through "foreclosure-rescue" scams.

Under the scheme, unscrupulous brokers offer to negotiate a loan modification for homeowners having trouble paying their mortgage. The brokers charge an up-front fee of several thousand dollars. But they fail to ever reduce the loan; or worse, they stick the borrower with a more costly loan or trick him or her into a sale/leaseback of the house.

The growth in foreclosure-rescue scams is the direct result of the failure of the lenders to work with homeowners.

The National Consumer Law Center has urged Congress to ban up-front payments and allow for fees only if the broker is successful in modifying the loan. Other proposals include mandating that loan servicers provide borrowers with real-time information and a live person with the authority to modify loans. Beefed-up law enforcement also would help.

In the end, homeowners must do their own due diligence and be wary of paying up front for an offer that may never materialize.

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