As mortgage scams abound, free help awaits

Agencies frustrated at seeing damage done by foreclosure scams.

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By Ken McCall, Staff Writer Updated 12:40 PM Sunday, June 7, 2009

DAYTON — Maybe the worst thing about foreclosure rescue scammers is that they’re getting people to pay for something that reputable agencies do for free.

It’s a huge source of frustration for Beth Deutscher, executive director of the HomeOwnership Center of Greater Dayton, and people like her whose mission is to help homeowners in trouble. The center, a division of the faith-based, nonprofit St. Mary Development Corporation, provides counseling and education to current and potential homeowners. Among the services they offer is foreclosure prevention.

And, unlike the scammers, they never charge a cent.

“We do it for free,” Deutscher said. “There’s no reason for a homeowner to pay an upfront fee to get that sort of assistance.”

As the economy suffers and layoffs mount, Deutscher said her agency is seeing more homeowners in trouble. Its caseload has been doubling every year for the last three years and looks to do so again this year. In 2006, the center was carrying 231 cases. That load grew to 524 in 2007 and 1,162 last year.

For the first five months of this year, it’s worked 1,037 cases.

As a result the center, at 205 E. First St. in Dayton, has more than doubled staff to the current nine, plus two volunteers. It also opened offices in West Carrollton, Kettering and Troy to make it easier for homeowners to meet with their specialists.

Increasingly, Deutscher and her staff are seeing damage done by foreclosure rescue scams. The scammers, she said, are taking money from homeowners who can least afford it and are the most desperate.

Typically the scammer will offer to rework a mortgage in return for a fee.

“You know, if somebody has $2,100 it needs to go to the mortgage company, not somebody who claims they can help them get a workout,” Deutscher said. “Especially when there’s someone available who will do it for free.”

David Rothstein, a consumer affairs researcher for the nonprofit, Cleveland-based think tank Policy Matters Ohio, agreed.

“The bottom line is you should never have to pay, especially some kind of a down payment to get into a real foreclosure workout,” said Rothstein, who has studied the mortgage crisis in the state.

Many scams charge money upfront just to review documents or to be a negotiator, he said.

“That just doesn’t make any sense because statewide there are so many programs now through nonprofit groups or that work with the state through the Save the Dream initiative that can try to help,” Rothstein said. “And they have good success rates and good relationships with banks.”

The other red flag, Rothstein said, is when a company contacts you to offer services: “Generally, we’ve found that it is not a good thing when you’re getting contacted by another group.”

That’s what happened to the Rev. Willie Marshall. Like many foreclosure rescue scam victims, he said he was contacted by a telemarketer and promised a new mortgage with payments that were one-third of his current monthly payments.

Experts say scams are also being pushed by mail, billboards, Web sites, television, radio, Internet and newspaper ads. Some are even going door-to-door.

Marshall is now a client of the HomeOwnership Center, but he is unlikely to recover the $1,400 he paid a company for mortgage help.

He and five other Ohio homeowners have filed complaints with Ohio Attorney General Richard Cordray’s office against 21st Century Legal Services of Rancho Cucamonga, Calif. Calls to the company and the representative seeking comment were not returned.

Marshall said the caller said he was affiliated with the lender that owned his mortgage — Countrywide Home Loans.

“He really played on us,” the 74-year-old Marshall said. “He said this was coming from (President) Obama. And I’m telling you, we ate that up. He seemed to be so honest, but he was phony as a $3 bill. He took our money and they haven’t done nothing.”

The scams are often using the new federal loan modification program, Making Home Affordable, as cover, Cordray said.

“People are vaguely hearing there’s money out there and they don’t know exactly how it works,” Cordray said. “Then these people contact them and pretend this is how it works. I think frankly they’re the scum of the earth.”

The scams are multiplying. In the last 21 months, the Attorney General’s Office has received 301 complaints against 136 companies, but Cordray said they were “just the tip of the iceberg.”

While Cordray doesn’t have authority under state law to criminally prosecute scammers, his office has filed 10 civil lawsuits against foreclosure rescue scams seeking restitution to victims and punitive damages of $25,000 for each victim.

Cordray said his office is “looking very closely at the Rev. Marshall’s complaint,” and urged anyone who feels they may have fallen victim to contact his office at 1 (800) 282-0515 or www.speakoutohio.gov.

In the meantime, experts say, the best defense is education about the relatively new scams.

Marshall said he hopes his experience will help others. “They are playing and preying on the lack of knowledge and the elders who don’t know,” he said.

If he were to preach a sermon on the subject, what would he say?

“I would be warning people: If it looks to good to be true, leave it alone,” Marshall said. “Because 99 percent of the time it’s false and a lie.”

Contact this reporter at (937) 225-2393 or kmccall@DaytonDailyNews.com.

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