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…)

Starting today, some homeowners who are “under water” with their mortgages can refinance under the Home Affordable Refinance Program (HARP), but the Better Business Bureau of Southern Arizona is warning consumers that banks and mortgage companies aren’t the only ones gearing up for the rush of applications.

“Whenever there is a new or updated government program that may be a bit confusing, scammers come out of the woodwork to take advantage of that confusion,” said Kim States, BBB President. “There are already hundreds of websites claiming to be able to help homeowners through the HARP process, but many of them are rip-offs and scams.”

BBB is warning all homeowners who are thinking of applying for a HARP refinance to:

• Deal directly with your lender first, and never make payments to anyone other than your lender.
• Don’t pay upfront fees to anyone who promises to provide counseling, takes care of the paperwork for you, or stops the foreclosure process.
• Be wary of anyone who tells you not to contact your lender, a lawyer or a credit counselor, or who asks for payment by cashier’s check or wire transfer.
• Never sign over your deed to anyone, or allow yourself to be pressured into signing something you don’t understand.
• Be especially careful of look-alike and sound-alike websites.
• Find out if you qualify by going to www.makinghomeaffordable.gov or by calling the Homeowner’s HOPE Hotline at 1-888-995-HOPE (4673) to speak to a HUD-approved housing counselor for free (assistance is available in English and Spanish, and in other languages by appointment).
• Report scams to BBB at www.bbb.org/us/scam-source.

The changes to the HARP program were announced by President Obama in October to allow (more…)

Within seconds of searching the Internet, potential home renters can find all the information they need about a possible new home, such as pictures, prices and virtual tours. However, such tools give scammers the perfect opportunity to take advantage of consumers. Better Business Bureau warns renters to be on the lookout for phony ads on Craigslist and other Internet services aimed at stealing money.

Consumers typically fall victim to these scams after responding to an online classified for a rental property. Victims say they are asked by the supposed landlord to wire money for the deposit and first month’s rent in order to receive the keys to the rental home. When asked if the renters can view the property prior to wiring money, the landlords claim to be out of the country and unable to show the house.

As a result of this scam, many shocked homeowners have received knocks at their doors from people who were planning to move into their new rental home. Often, the actual homeowners have their house up for sale — not rent — and have pictures posted online that the scammers steal for their phony listings.

BBB warns consumers of the following red flags:

The deal sounds too good to be true. Scammers will often list a rental for a very low price to lure victims. Find out how comparable listings are priced. If the rental comes in suspiciously low, consider walking away.

The landlord is located elsewhere and prefers to communicate via email. Scammers might (more…)