Since the subprime mortgage meltdown of December 2007 to June 2009, mortgage modifications have saved many homeowners from foreclosure. Yet many illegitimate companies and individuals have preyed on people seeking modifications. My advice to you is to beware of offers to modify your mortgage for a fee.
On February 17, 2016, a federal grand jury returned an indictment against Rene de Jesus de Leon and his wife Pedrina Rodriguez Bonilla, both of Silver Spring, Maryland, and Ana Maritza Gomez of Hyattsville, Maryland, on charges arising from a residential mortgage fraud scheme. According to court documents, the defendants told homeowners who wanted to modify their mortgage loans and prevent foreclosure of their homes that — for an upfront fee between $2,000 and $6,000 — they could lower the homeowners’ monthly payments and allow them to pay off their loans more quickly.
The defendants told the victims to make monthly payments to them instead of to the mortgage companies. They called their service a “principal reduction consulting program,” which sounds great, but in reality, doesn’t happen very often. The defendants face a maximum sentence of 20 years in prison for conspiring to commit mail and wire fraud, and 20 years in prison for each of nine counts of mail fraud.
Such modify-for-a-fee schemes are not unique to Maryland. A similar scheme was broken up in Virginia two years ago. Lorene Chittenden of Centreville, Virginia, was sentenced to 42 months in prison and three years of supervised release for a multi-million dollar mortgage fraud scheme. According to court documents, among other charges Chittenden and her co-conspirators from Manassas, Virginia, real estate firm Vilchez & Associates, fraudulently inflated the income and assets of their clients to qualify them for mortgage loans their clients could not afford.
Beware of Offers to Modify Your Mortgage for a Fee
Under FTC rules, companies pitching foreclosure rescue and loan modification services may not collect any fees until they have provided a written offer from a lender or mortgage servicer that the consumer decides is acceptable. One telltale sign of a mortgage modification scam is the request for an upfront fee. No legitimate company will require an upfront fee to attempt a modification of your mortgage. You can visit Making Home Affordable for more information.
Mortgage modifications are purely voluntary on the part of the lender. Modifications are frequently obtained after filing a Chapter 13 bankruptcy, however, because the mortgage lender finds it too burdensome to administer what are essentially two different loans: the original mortgage and the Chapter 13 arrearage repayment. Even if you have been previously denied a modification, once you file a Chapter 13 bankruptcy, the lender often changes its tune. You may also be a better candidate for modification in bankruptcy since your overall indebtedness is being addressed. If you are in pre-foreclosure, you should contact an attorney immediately to determine your options.
For the last five to six years, foreclosures have been steadily declining since hitting a peak. The nationwide total of 32,000 foreclosures completed in December 2015 represents a drop of nearly 73 percent from the peak in September 2010. Maryland alone experienced a 59 percent decline in foreclosures in 2015. Yet every household recovers differently from a recession. If you are behind on your mortgage, seek advice from a bankruptcy attorney. Beware of offers to modify your mortgage for a fee. Steer well clear of such companies and contact an attorney instead.
What To Do If You Feel You’re Being Scammed
If you live in Maryland and have received an offer to modify your mortgage for a fee, you should reach out to the Maryland Mortgage Fraud Task Force coordinator Jonathan Biran at (410) 209-4920. If you live in Virginia, you can contact the United States Attorney’s Office for the Eastern District of Virginia at (703) 299-3700. In the District of Columbia, the United States Attorney’s Office for the District of Columbia at (202) 252-7566.