Gloria Kroske took out a second mortgage on her Dallas, Ore. home in better times. Now, she and her husband are struggling to pay their bills on Social Security. Her husband has found work off and on, but multiple health problems make working difficult and medical bills are piling up.
While the Kroskes are current on their first mortgage, the second mortgage has been neglected and the bank has started the process of foreclosure. In December, they were forced to file bankruptcy in order to keep the home they have owned for 30 years.
Kroske said in a moment of weakness, she called National Auditing, a company based out of Texas that advertises nationally. She paid more than $1,000 for the company’s services, but never got the modification she needed. Once she made the last payment, she said company representatives stopped answering her calls.
“I just needed some help and they said that they did auditing and stuff on these mortgage companies, so I gave them a call,” she said. “It’s called desperate.”
Customers nationwide have turned to Better Business Bureau, state attorneys general and the Federal Trade Commission with similar stories. The FTC has issued multiple warnings about loan modification and forensic audit scams. BBB registered approximately 1,400 complaints against loan modification companies in 2011.
Though Kroske needed a loan modification, which changes the initial terms of the loan to lower payments, National Auditing only provided a forensic audit.
Such an audit reviews the terms of the original loan for errors, and the FTC warned “there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.”
Another consumer, Brian Becker, fell for a different tactic. He lost $2,500 when he hired a Florida company to help him modify his mortgage. He said Summit Legal Group called him and the representative claimed the company secured loan modifications for 100 percent of its clients.
“He assured me that the reason (the fee) was high was they had 100 percent approval rate,” Becker said. “If — for any reason at all — they couldn’t do it, I would get a full refund.”
He said he researched Summit Legal Group online and did not find any negative reviews or hints that there might be trouble. He had researched loan modifications and knew there were restrictions on who could provide such services.
“I thought I was doing my homework here,” he said. “So, I figured OK, I’m doing the right thing going with a law firm.”
He hired Summit Legal Group and paid the $2,500 fee. After not hearing anything for months, a representative from the company called him asking for more money. At that point, he said he knew he (more…)