California Loans News

NeighborWorks America, a Washington-based national housing nonprofit organization, has launched an educational campaign in Southern California to “combat scams targeting homeowners in peril of foreclosure.”  This campaign was also participated by federal agencies like the Federal Trade Commission (FTC).

Chief operating officer of the NeighborWorks America Eileen Fitzgerald said, “Loan modification fraud is on the rise, costing troubled homeowners thousands of dollars up front for mediation and counseling services that are provided free by federally approved nonprofits.” She added that with better educated borrowers, the problem could be solved easier. “If you can stop people from going, then you don’t need to worry about enforcement,” she said.

Assistant director of the FTC Western Region said that the educational campaign would make a greater awareness against scamming even than law enforcement “because when law enforcement steps in, the money is gone.”

Fitzgerald further explained that troubled borrowers usually pay fees equivalent to amounts from $1,500 to $3,000 seeking assistance to possibly reduce their mortgage payments. “The companies, in turn, promise to negotiate with their lenders on their behalf. In some cases the companies promise that loan amounts will be modified, a result that is difficult and rare.”

She added that the homeowners doubly have to handle difficulties of gathering the fees only to face foreclosure due to non-performance of the expected tasks to their chosen servicer. “Those facing foreclosure can lose precious months that could be better spent with federally approved nonprofit counselors who don’t charge for their services.” Fitzgerald then referred to loan modification workers like attorneys, mortgage brokers or real estate agents extensively advertising on radio, television and print to be “very good marketers” but  unfortunately do not carry out what is expected of them.

The educational campaign targets the audiences composed mainly of senior citizens, Latinos, African Americans and Asian Americans who “have been particularly victimized.” The state’s office of attorney general has already received more than 2,500 complaints of loan modification fraud only from October 14 of this year. This is a very big leap from only 163 filed complaints last year.

For the next three weeks, the organization’s volunteers and community organizers together with their local affiliates from the Los Angeles Neighborhood Housing Services would distribute educational marketing materials. These would contain vital information that would warn people against loan modification fraud. The campaign’s first stop was the WorkSource center in Sun Valley.

In the coming weeks, the campaign would also be pursued in other foreclosure hard-hit areas like Miami, Florida and Columbus, Ohio.

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