Mortgage Casualties Flocking to the NFCC for Free Assistance!

There hasn't been a whole lot of good news on the economic front in recent weeks and the mortgage crisis has inspired our politicians to mortgage our grandchildren's future. Ironically, most of the experts believe it all started with what is being called the "mortgage crisis."

Even worse, the average person is merely a hostage in the equation because, without the bailouts, there is little doubt it would cause more pain and suffering for the common person. Still it's pretty disgusting to see corporate suit types getting millions of dollars in bonuses and showing up in Washington with their hands out after failing in their jobs. So far, we haven't seen much help for the people funding this massive bail-out, but if you look hard enough, there are a few places where an average person can get a little help free-of-charge.

The National Foundation for Credit Counseling (NFCC) is one of the few places helping the little people dig out of the mess that has been created by, in my opinion, a few greedy people. The NFCC is getting busier all the time, registering 70 percent more calls for help than they did last year in October. For the year, they are registering 30 percent more calls. Sadly, this statistic might reflect that more people are reaching out for help.

The NFCC has been around since 1951 and is considered the longest serving national nonprofit credit counseling organization. They provide free financial advice at over 850 offices located throughout the country. Consumers can take a Mortgages Reality CheckSM, a self-assessment test that determines one's risk of foreclosure. Year to date, statistics reflect a 33 percent increase in people taking this test. Even worse, those showing up in the red danger zone have increased 15 percent compared to last year. Statistics also reveal that the number of people seeking counseling from the NFCC has grown 63 percent over last year.

If you were to go by these statistics, the mortgage crisis is getting worse. To rise to the challenge, the NFCC has increased the staff of NFCC-Certified Credit Counselors 10 percent (almost 2,600). They have also increased the number of NFCC-Certified Housing Counselors by 25 percent.

“Arguably, we’re living in the worst economic times of our lifetime. Consumers are smart to reach out for help, and doing so sooner rather than later is always preferable. Whatever your financial problem may be, you do not have to go through it alone,” according to Gail Cunningham, spokesperson for the NFCC.

The NFCC can help people online, or by calling (800) 388-2227. For a Spanish-speaking counselor, call (800) 682-9832. Their website also has a Spanish version.

FBI Educates Public on Mortgage Scams

A lot of people are in dire financial straights because they got sucked into what is now being called the mortgage crisis.

Now that the problem is being examined carefully, a lot of fraud is being blamed as being a contributing factor to the entire mess. The problem is that the fraud aspect of the mortgage crisis is hardly over. Mortgage scams designed to take advantage of people in financial trouble are flooding the Internet and even the classified section of local newspapers.

Mortgage fraudsters for the most part don't have a conscience and could care less if they steal from your grandparents, neighbors or you!

The FBI, who has put more than a few of these people behind bars in recent history is using the intelligence gathered in their investigations to reach out to the public on how to avoid becoming conned with promises of a new beginning, or rescue from their current dilemna.

“And while some of these steps may require you to do a little extra work now in the long run it may save you aggravation, money, and even your house,” according to Special Agent Scott Broshears, a mortgage fraud supervisor with the FBI.

The first recommendation is to get referrals and then check out the licenses of real estate and mortgage professionals with government (state and local) regulatory agencies.

They also recommend that you do your own research on what homes have been sold for in your area. Checking out tax assessments is one way to do this.

Beware of too good to be true mortgage deals, especially using a no money down gimmick.

Never let anyone talk you into making a false statement on a mortgage application. This is how a lot of people ended up with mortgages they couldn't afford in the first place.

Don't sign a blank document or a document with blank lines. Something could be added later. Read everything thoroughly and if you don't understand everything completely get legal assistance.

Don't get conned into paying an upfront fee to get out of mortgage trouble. Be especially wary if these solicitations come from e-mail or web advertisements. You will likely be out the up-front fee and in the same boat as before you paid for the assistance.

In more sophisticated upfront (advance) fee schemes involving foreclosure fraud, victims are even talked into signing over their property. The victim loses the upfront fee, their house and still owes their mortgage when this occurs. Advance fee fraud has been around for centuries and is merely a false promise of something that is too good to be true in return for an advanced payment.

On a final note, the FBI recommends that if you are facing foreclosure, the best thing to do is to see if your lender will work for you.

Agent Broshears and the men and women working with him have seen their case-load with mortgage fraud triple in the recent past. By sharing these tips, learned from real life investigations, they hope to make their job easier and see a few less people victimized by this growing phenomenon.

If you need more information on mortgage fraud, the FBI has a page on their site dedicated to this subject.

Fraud, Greed and Special Interests in the Mortgage Crisis Cost Everybody

(Actual photo of an an allegedly remodeled condo courtesy of the FBI)

If you think the factors that enabled the mortgage crisis have been fixed, think again.

An example of this might be the Tennessee minister (Reverend Steve Young)-- awaiting sentencing after pleading guilty to mail and wire fraud to commit mortgage fraud -- who was recently rearrested to protect the general public. While out on bond, Reverend Young was using the identities of members of his parish to obtain more fraudulent mortgages, according to an article I came across in commercialappeal.com.

Apparently, members of his parish turned Reverend Young in after discovering the mortgages when reviewing their credit reports. Of course, it is considered wise to review your credit report on a regular basis after already being exposed to identity theft.

With the current mortgage crisis going on the story of Reverend Young is just one of many examples of fraud, greed and corporate bailouts in the mortgage crisis. In April, the FBI released the 2007 Mortgage Fraud Report. The report refers to this type of fraud as a low risk, high yield enterprise. Maybe we wouldn't see so much mortgage fraud if it weren't so low risk and extremely profitable?

According to the report, the victims of mortgage fraud are many. They include the people living in the neighborhoods where the fraud occurred, borrowers, and the mortgage industry, itself. For instance, when properties are sold at artificially inflated prices, property taxes increase. After the bubble bursts and the fraud becomes apparent, sellers have a difficult time selling their homes because they owe more than what the house is worth. This leads to foreclosures and can cause neighborhoods to deteriorate, which tends to lower all the property values in the area.

With the release of the 2007 report, the FBI announced Operation Malicious Mortgage, which to date has netted an impressive amount of arrests. The latest in this ongoing operation are rumors that the FBI is investigating a major lender, IndyMac for mortgage fraud. Despite the arrests, a lot of people are still suffering after getting caught in up one of the schemes that contributed to where we are at today.

One of the better publications covering mortgage fraud is the Mortgage Fraud Blog. It has up-to-date information on Operation Malicious Mortgage and on the subject in general.

One might think now that we are well on our way into the mortgage crisis, fraud related to mortgages would be going down. Sadly, this isn't the case and the story of a minister released on bond after being convicted for mortgage fraud -- then rearrested for the same thing bears out this contention.

Another, even sadder twist are the desperate homeowners being taken in by scammers promising to rescue them from their current situation. Besides greed, fear is a often used method to snare victims in fraudulent schemes. In May, the Comptroller of the Currency Administrator of National Banks (Treasury Department) issued a warning on this subject. Some of the scams include what are known as lease-back or repurchase scams, refinance fraud and bankruptcy schemes. Quite often, these schemes are nothing more than a means to steal whatever equity the person being foreclosed on has in the property, leaving them with nothing.

Bringing the mortgage crisis down to a more human level is the HousingPANIC blog. The blog is a wealth of information from the consumer point of view and keeps track of high-profile types recently arrested for mortgage fraud.

Thus far, in what has been termed the mortgage crisis, we've seen the banking industry get bailed out (at taxpayer's expense), a lot of people getting arrested, but so far very little help for the people getting foreclosed.

I've seen this being rationalized as it's their own fault because they knew they were getting in over their heads. While this is true -- especially in the case of the big players in the mess -- many of the smaller players were being wooed, coerced and simply taken advantage of. To me at least, this bears consideration.

Finally, it appears that some help for the little people losing their shirts is on the way and the Senate finally got it together and passed a bill. The bill is expected to be signed by President Bush with "reservations." In reality this bill (H.R. 3221) extends a lifeline to Freddie Mac and Fannie Mae by allowing people being foreclosed on to convert to government loans. Freddie Mac and Fannie Mae have about $5 trillion in mortgages, which accounts for about half the outstanding loans in the United States.

Interestingly enough, it is being reported by the AP, that Senator Jim DeMint, R-South Carolina was banned by the Democratic leadership from calling for a vote to stop the companies benefiting from this from making political donations or lobbying for this bill. Apparently, although facing bankruptcy, these companies have enough money to spend on lobbyists and political contributions? In fact, Freddie Mac and Fannie Mae spent about $3.5 million in the first quarter of this year on lobbyists.

While I'm glad about half of the little people are finally getting some help, I have to question at what cost? The sad truth is that we (taxpayers) will pay for this and as usual, special interests and not the interests of the public seem to have too much influence in the decision process.

Another question yet to be answered is what happened to all the money these large corporations made during the housing boom? It appears the profits I'm referring to are made private, while the costs incurred from deceptive business dealings become public? To me, this is another example of how special interests can spin political outcomes in their own favor.

Of course, the even sadder truth is that the economy can't suffer too many more large employers posting large losses or going under. When this happens a lot of the little people working for them become unemployment statistics. This is probably the sad reality of the situation. There is little doubt, we need to fix the problem, but are we going about it in the most just manner?

I've often wondered how much better off we would all be if special interests (lobbyists) were banned, altogether? Given all the polls -- clearly showing a lack of confidence in our leaders -- watching special interests consistently receive preferential treatment is probably one of the reasons why. Perhaps, we would have more confidence in them, if we felt they were representing us in consideration for all the taxes we are being asked to pay.

How to spot a foreclosure scam

With 1-2 million foreclosures on the horizon, we are probably going to see a lot of shady characters advertise on lamp posts, classified ads, pay-per-click advertising and spam e-mails with questionable promises to rescue people in a difficult situation.

Apparently, the mortgage crisis is now so bad some are saying it's likely to cause a recession.

Foreclosure scams have been around for a long time, predating the current mortgage crisis.

Scams rarely change very much, they tend to disappear and then resurface when there is an event that makes them viable again.

For instance, the infamous Nigerian 419 scam which is frequently in the news can be traced to what was known as the Spanish Prisoner letter, which dates back to the early 1900s.

Advance fee is one of the more popular variations of a foreclosure scam, people are asked to pay a large fee up front and then get nothing for their money.

I had a reader send me an e-mail, where this was occurring and the intended victim was being asked to wire the money. Being asked to wire the money is common in all the advance fee type scams, because once it's wired the sender has very little recourse, if any at all!

I found an interesting article on the DOJ (Department of Justice) website published in 1998 by the American Bankruptcy Institute.

The report details the following types of foreclosure scams:

For the cost of a bankruptcy filing fee, a debtor can immediately obtain one of the most powerful injunctions available under American law: the automatic stay," the foreclosure scam task force pointed out. The task force report described bankruptcy foreclosure fraud as the practice of filing for bankruptcy to delay or defraud creditors, without intending to comply with the requirements for obtaining a bankruptcy discharge or completing a repayment plan.

The foreclosure scam most commonly associated with the West Coast is the fractional interest transfer. Typically, a partial interest--perhaps 5 percent or 10 percent--in property held by a homeowner facing foreclosure is transferred to a real or fictional entity already in bankruptcy. Because the property interest is then held by a bankruptcy debtor, the original owner's creditor cannot foreclose until the bankruptcy court lifts the automatic stay.

Some scams involve fractional interests transferred with the knowledge of the original property owner. Often, however, the original owner first transfers the property to the perpetrator of a foreclosure scam, who then transfers the fractional interest without the original owner's knowledge. Sometimes a property is moved from case to case as the stay is lifted; one residential property was linked to 24 different bankruptcy cases.

The task force report explained how one homeowner facing foreclosure was persuaded by a scam perpetrator to sign deeds of trust and grant deeds transferring fractional interests in her property. The homeowner paid the foreclosure consultant several hundred dollars per month so she could stay in her home. The fractional interest recipients included apparently fictitious individuals as well as homeless persons recruited for a fee to participate; eight recipients filed for bankruptcy one after the other. Each filing stayed foreclosure on the property, causing a 10-month delay between the first filing and the completed foreclosure.

Many more variations of bankruptcy foreclosure fraud are surfacing around the country. Probably the most widespread involves the use of foreclosure notices to identify individuals facing the loss of their homes. The scam perpetrator contacts the home owner, advertising "mortgage assistance" or "foreclosure counseling" and promising to work out the home owner's problems with the mortgagee or to obtain refinancing for an up-front fee typically ranging from $250 to $850. The perpetrator may direct the home owner to "fill out some forms," including a blank bankruptcy petition, or may collect the information needed to complete a petition later. The perpetrator subsequently files a bankruptcy petition in the home owner's name, after filling in the bankruptcy papers signed by the home owner or forging the home owner's signature. The bankruptcy petition invokes the automatic stay, the imminent foreclosure is postponed, and the home owner stops receiving collection calls and letters.

In most cases, the perpetrator does not tell the home owner about the bankruptcy petition, instead convincing the home owner that foreclosure activity has ceased because mortgage problems have been worked out. The perpetrator may tell the home owner that he or she might receive a notice from the court, which should be ignored. The home owner may even be told that the perpetrator has gone to court on the home owner's behalf. No one appears at the Section 341 meeting, the case is dismissed, the foreclosure goes forward, and the home is lost.

Permutations of this scam include the perpetrator's collecting monthly mortgage payments from the homeowner, falsely stating that they will be forwarded to the mortgagee. In these cases, each defrauded homeowner pays not only the up-front fee for "services," but also hundreds or thousands of dollars in mortgage payments.

In another increasingly common alternative, the scam perpetrator convinces the home owner to quit-claim the residence to the perpetrator or to sell the residence for a nominal fee such as $1. The home owner agrees to transfer title because he or she has little or no equity in the property. The perpetrator charges the home owner "rent" or a "consultant's fee" or "management fee" to stay in the residence while the mortgage problems are worked out, after which the home owner will be able to "apply for repurchase" of the property or share the profits if the perpetrator sells the property.

But it costs money for the perpetrators to file all of these bankruptcy cases. To avoid bankruptcy filing fees, some perpetrators transfer an interest of the home owner's quit-claimed property into the name of an existing bankruptcy debtor--perhaps a Chapter 11 business debtor across the country--in a variation of the fractional interest scam. Typically, the debtor learns that a property interest has been transferred into its bankruptcy estate when it is contacted by counsel for the property owner's secured creditor, who has learned it cannot foreclose because the property is owned by a bankruptcy debtor.

Full report from the American Bankruptcy Institute, here.

Reuters video (courtesy of YouTube) did an interesting piece that is more recent. In it they offer some pretty good advice to be EXTREMELY CAREFUL before signing any documents related to your home in any of these come-ons.

The end result could be losing your home to the person, who is claiming to help you!

You can view the video below: