Wasden warns of forensic mortgage loan audits
A new type of foreclosure "rescue" scam has infected Idaho, Attorney General Lawrence Wasden said on Thursday. Using half-truths and outright lies, so-called "forensic loan auditors" are exploiting financially strapped homeowners who are desperate to save their homes from foreclosure.
These scam artists use many titles - forensic auditors, mortgage loan auditors and foreclosure prevention auditors. They charge upfront fees ranging from $1,000 to $1,500 to review consumers' mortgage documents, allegedly to determine whether lenders complied with mortgage lending laws. These "auditors" claim consumers can use their audit reports to avoid foreclosure, accelerate the loan modification process, reduce their loan principal, or even cancel their loans.
"Nothing could be further from the truth," Wasden said. "There is no evidence that these audits result in anything other than more disappointment for the consumer."
Forensic loan audits do not accelerate the loan modification process or provide any unique form of foreclosure relief. While some federal laws allow consumers to sue their lenders based on mistakes in loan documents, even if the consumer prevails, the lender is not required to make the loan affordable. If consumers "cancel" their loans, they will lose their homes and must repay any borrowed money to their lenders.
"Consumers who are delinquent in their mortgage payments or who are facing a foreclosure need to work with their lenders to formulate a solution," Wasden said. "Sometimes that solution is a loan modification, a short sale, or even foreclosure. While consumers instinctually want to save their homes, sometimes it simply isn't possible."
Avoiding foreclosure rescue scams
When looking for foreclosure prevention help, Wasden urged Idahoans to avoid any business that:
• Promises to stop the foreclosure process
• Tells you to cut off communication with your lender or servicer
• Charges an upfront fee before performing any services
• Asks you to quitclaim your home to the business
• Requires you to make your mortgage payments to anyone other than to your lender
• Pressures you to sign papers that you do not understand
Finding legitimate help
The Attorney General's publications Foreclosure Prevention and Foreclosure Scams: How to Tell the Difference and Buying A Home are available free at www.ag.idaho.gov.
Idahoans who can no longer afford to pay their mortgage need to speak with their loan servicer immediately. The servicer's telephone number is located on your payment statements and on the servicer's website. Most servicers participate in the federal government's Making Home Affordable program and are willing to consider your application for a modification. For more information, visit www.makinghomeaffordable.gov.
For assistance, you can call (888) 995-HOPE for free personalized advice from housing counseling agencies certified by the U.S. Department of Housing and Urban Development (HUD). For free guidance online, visit www.hopenow.com.
The Attorney General also employs a part-time housing counselor to facilitate better communication between consumers and their servicers. To speak with the Attorney General's housing counselor, call (208) 334-4536.
If you lost money due to a foreclosure rescue scam, you should file a complaint with the Attorney General's Consumer Protection Division. Complaint forms are available online at www.ag.idaho.gov or by calling (208) 334-2424 or toll-free in Idaho (800) 432-3545.
If your complaint involves a licensee of an Idaho state agency, you should file a complaint with that agency:
• Idaho Department of Finance (mortgage modification providers, mortgage brokers and credit counselors) finance.idaho.gov or (208) 332-8002
• Idaho State Bar (attorneys) www.isb.idaho.gov or (208) 334-4500
• Idaho Real Estate Commission (real estate agents) www.irec.idaho.gov or (208) 334-2050 / (866) 447-5411 (in Idaho)