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5. HRSR 09-07-2010ITEM # 5. ver MEMORANDUM. TO: Housing Redevelopment Authority FROM: Annie Deckert, Economic Development Assistant DATE: 7 September 2010 SUBJECT: MN Home Ownership Center Presentation -Foreclosures Update ISSUE Mr. Ed Nelson of MN Home Ownership Center will make a presentation at the HRA meeting regarding the attached Look Before You Leap campaign designed to stop foreclosure prevention scams in MN BACKGROUND The HRA partnered with MNHOC in October of 2008 to create and distribute informational materials regarding free foreclosure prevention assistance and resources to various businesses, organizations and churches in the community. MNHOC works with home owners in fear of foreclosure to offer advice and create a plan to assist in preventing foreclosure. In 2008, MNHOC assisted 3,753 cases and 6,029 cases in Greater MN in 2009. MNHOC reported that 58% of closed cases avoided foreclosure in 2009; 368 of them in Sherburne County alone. Staff will continue to work with MNHOC to market and distribute foreclosure prevention information. 1 _ r;. r: ~~ /~ .: i~ Look ~ Before you leap LOAN MODIFICATION SCAM ALERT k ~ ~~~,. r friends and nei hbors ~~~ ~rr, » He p you g ~~a Avoid reda#o foreclosure scams ~ ~}`~~{ p rY ~, ~~; :, "Look Before You Leap" is at statewide public education campaign raising public awareness about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connecting struggling home owners with the state's network of free, trusted nonprofit foreclosure counselors. It is led by the Minnesota Home Ownership Center, in partnership with NeighborWorks° America and continues to build support from organizations across Minnesota: 1. Mortgage foreclosure scams are booming The Federal Trade Commission (FTC) received only one complaint of a foreclosure scam in 2008. But by the end of 2009, the number of complaints swelled to 7,927. 2. Scams Strip home owners of their savings, their home... or both At their best, for-profit companies charge home owners thousands of dollars for help that is already available in Minnesota for free. At their worst, scams are robbing already vulnerable home owners of their home, their life's savings, or both. 3. Everyone benefits from stopping foreclosures 4. Stopping foreclosures starts with ending scams Predatory stammers often hide in plain sight with ads on the radio, online and in our communities. Help put an end to predatory scams by reporting them to the Minnesota Attorney General. 5. And turning home owners to real local resources they can trust Struggling home owners should contact the statewide network of 24 non-profit agencies who offer FREE foreclosure relief and credit counseling to Minnesotans statewide. Go to www.LookBeforeYouLeap.org to find a counselor near you. Each foreclosure costs over $78,000 when totaling the costs to neighbors, home owners, cities and lenders according to the Joint Economic Committee of Congress. Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651) 659-9336 Toll Free: (866) 462-6466 LookBeforeYouLeap.org ~ )) Be On The Lookout For ... -- )) Know The Answers To ... Be wary of companies offering help Before agreeing to work with any that... company for mortgage help, know • Charge fees for their services the answers to these questions: • Ask you to sign over title to your Has the organization registered with the Minnesota Department of home or even power of attorney Commerce as an approved loan • Claim you should stop paying your modification organization? mortgage during the loan .Does the organization charge a fee modification process at any point in the work? • Claim you should pay them, rather ,Does the organization benefit than your bank financially from the course of • Promise a guaranteed outcome or action they are recommending? claim they can help people in any situation ~~~ L_oo_ k_ ~ Before you leap LOAN MODIFICATION SCAM ALERT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651) 659-9336 Toll Free: (866) 462-6466 » Stopping foreclosure prevention scams in Minnesota The foreclosure prevention scam "industry" did not exist three years ago, but by the end of 2009 business was booming. The Federal Trade Commission recorded only one foreclosure scam complaint in 2008, but in 2009, the agency received nearly 8,000 complaints. Signs of scams No one knows the full scope of foreclosure prevention scams because such companies rarely register with the appropriate legal authorities and can often go unreported by the homeowners they target. However, these scams often share several unsavory characteristics, such as: Targeting Distressed Borrowers. Scamming companies tend to focus their direct mail, flyers and other publicity efforts in communities with high concentrations of adjustable rate mortgages or sub-prime loans, among seniors, and in poor and limited English .communities. Tricks of the trade Foreclosure prevention scams are as numerous as the companies who perpetrate them, but most follow one of four trends: 1. Phantom Help. A fraudulent company collects an up-front fee from home owners trying to save their homes from foreclosure, and then disappears. 2. Bankruptcy Foreclosure. Stammers promise to negotiate with the lender for refinancing on the consumer's behalf. Instead of contacting the lender or refinancing the loan, the scam company pockets the fee and files for bankruptcy in the consumer's name -sometimes without the consumer's prior knowledge. Using Federal and Official-Sounding Names. Names like "Federal Loan Modification Law Center," "Hope Now Modifications, LLC," and "Bailout.hud-gov. us" strive to create false connections to legitimate federal home owner assistance programs. Scam company websites also often feature falsified logos from the Better Business Bureau, the U.S. Department of Housing and Urban Development (HUD) and other reputable agencies. Hiding in Plain Sight. Scam companies rely on highly-visible web, radio and newspaper advertising, along with direct mail and distributed flyers, to promote their for-fee services. More troubling still, the advertisements strive to make the Scamming companies resemble the free, trusted nonprofit foreclosure prevention services that are available to area home owners. Lease Buy-Back. A home owner facing foreclosure signs over the deed to a company or individual who promises to buy it and then sell it back at a later time when home owner finances are in order. The home owner is promised that they will be allowed to rent the property in the interim. However, when the company or individual takes over, they evict the original home owner, stripping them of their home and equity. 4. Reverse Mortgage. A home owner who has lost income is offered a loan for monthly payments from the equity of their home. While sometimes legitimate, stammers often use this approach to charge sky-high fees and, at times, take immediate ownership of the home. No matter the approach, for-profit foreclosure scams unnecessarily strip homeowners of their limited resources and often increase a homeowner's danger of foreclosure by delaying real help. If you see a potential stammer, call the Minnesota Attorney General's Office at (800) 657-3787 to report their questionable work. LookBeforeYouleap.org I~ _ _ Look ~ Before you leap LOAN MODIFICATION SCAM ALERT Struggling home owners have a right to free, trustworthy services. Many home owners in danger of foreclosure are also struggling with a job loss, mounting medical bills or other stressors that have pushed mortgage payments out of reach. Home owners have the right to expect quality, free and trustworthy foreclosure prevention services from a network of trained mortgage professionals as an alternative to the predatory scams. In Minnesota, this network is coordinated by the Minnesota Home Ownership Center. Goal "Look Before You Leap" is a statewide public education campaign that empowers home owners to spot deceptive scams and to protect their most precious asset -their home. The effort engages local governments, nonprofits, community and business leaders, and citizens in preserving home ownership in Minnesota by calling attention to for-profit companies' predatory techniques and offering home owners free alternative home preservation solutions. Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651) 659-9336 Toll Free: (866) 462-6466 LookBeforeYouleap.org » Gui-ding principles Overview One in every 20 Minnesota homes was foreclosed upon between 2005 and 2009. As foreclosures continue to mount, for-profit foreclosure prevention scams have arisen to prey on struggling home owners at their weakest. In fact, the scams have boomed from only one reported to the Federal Trade Commission (FTC) in 2008, to 7,927 in 2009. At best, these companies charge money for services otherwise available for free. At their worst, they require enormous up-front fees or ask for the home title, only to leave the home owner in an even worse situation than before. Guiding principles "Look Before You Leap" is a statewide public education effort based on three key principles: Everyone benefits from preserving home ownership. Each foreclosure results in total costs of up to $78,000 for neighboring home values, local governments, lenders and home owners are accounted for, according to the Joint Economic Committee of Congress. With such expansive costs, we all pay the costs of foreclosures - and we all benefit from their prevention. Preserving home ownership starts with protecting home owners from predators. Today hundreds of for-profit companies are marketing false promises of guaranteed foreclosure. prevention to home owners. Unfortunately, these wolves in sheep's clothing are stripping home owners of their savings, their home, or sometimes both. Minnesotans are already struggling enough in the current economy; they should not have to bear the additional burden of warding off predatory scams, too. NAME: ORGANIZATION: ADDRESS: CITY. STATE: ZIP: PHONE: EMAIL: ~~~ Look ~ Before you leap LOAN MODIFICATION SCAM ALERT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651) 659-9336 Toll Free: (866) 462-6466 ~.~' ~~ "Look Before You Leap" is at statewide public education campaign raising public awareness about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connecting struggling home owners with the state's network of free, trusted nonprofit foreclosure counselors. The effort engages local governments, nonprofits, community and business leaders, and citizens in preserving home ownership in Minnesota by calling attention to for-profit companies' unsavory techniques and offering home owners free alternative home preservation solutions. Partnership Expectations Partner organizations play a central role in Look Before You Leap's ability to reach home owners where they work and live, and lend invaluable credibility to the public education campaign. As a campaign partner, the Minnesota Home Ownership Center asks that your organization engage in the following activities: Stay in Contact • Dedicate a campaign liaison or contact person to receive regular communications. • Allow your organization's name to be listed as a supporter on the campaign website at www.LookBeforeYouLeap.org and in other communications. Spread the word • Include campaign information in internal newsletters or other communications wherever possible. • Invite a Look Before You Leap representative to give a presentation to your civic club meeting, organization or business meeting. • Include a link to LookBeforeYouLeap.org on your company website or in an electronic newsletter. • Share information about the campaign with your local elected officials and opinion leaders in your community as opportunities arise. Offer Your Ideas • Contact Julie Gugin (julie@hocmn.org) or Ed Nelson (ed@hocmn.org) with any ideas for the future of the campaign. Together, these simple actions will create n groundswell of awareness in the communities being hardest-hit by predatory foreclosure prevention scams. www. LookBeforeYo utea p. org LookBeforeYouLeap.org \ ~~ -`\ Minnesota r 's~ ~ Home Ownership Center The Minnesota Home Ownership Center is the state's leading independent, nonprofit provider of information and resources aimed at helping all Minnesotans to begin and maintain home ownership. Since 1993, we have served over 87,000 Minnesotans through our range of home ownership services, from pre-purchase education to foreclosure prevention counseling. HOME OWNERSHIP SOLUTIONS Through our partnerships with nonprofit service providers, governments and business organizations, we provide resources, information and technical assistance to all Minnesota first-time home buyers and home owners facing foreclosure. In particular, we work to help low- and moderate-income people and families statewide achieve and sustain home ownership. Resources for Home Buyers. The Minnesota Home Ownership Center is committed to making new home ownership attainable for Minnesota families and communities through its first-time home buyer educafion services. Across Minnesota, 38 community nonprofit organizations offer the Center's Home Stretch classes for first-time home buyers in three languages. This nationally-recognized curriculum provides .potential buyers with important information about the buying process, and our network of counselors is available to provide personalized follow-up planning and budgeting assistance. Sustaining Home Ownership. The Center is equally committed to empowering Minnesota home owners to keep their homes through foreclosure prevention efforts. Twenty-three nonprofit partners across Minnesota provide free, individualized planning and financial counseling services to home owners in danger of foreclosure, and advocate on behalf of home owners with lenders and other institutions. LEADING PARTNERSHIPS TO ADDRESS THE MORTGAGE CRISIS In 2008, 80,000 Minnesotans are expected to miss at least one mortgage payment and more than 28,000 Minnesota homes are projected to be foreclosed upon. In partnership with the Greater Minnesota Housing Fund, the Family Housing Fund, and Minnesota Housing, the Minnesota Home Ownership Center is at the forefront of responding to the mortgage crisis. The Center is leading increased public education and supportive counseling services through new outreach initiatives and its network of statewide partners. www.hocmn.org Look Before ou lea Stopping Foreclosure Rescue Scams in Minnesota • Intro to the MN Home Ownership Center • Sherburne County -Foreclosure Stats • Foreclosure "rescue" scams - "Look Before You Leap" - Sign of scams - Types of scams • How you can help • Founded in.1993 • Committed to encouraging and preserving home ownership ~, 1 The Minnesota Homeownership Center • Two facets of our work: tisaources for F~nsbuyers • 3flnonprofltpartner~ deliver servlcee • Pre-purchase cgmselinp • Credk crounaepnq • "Homestretch" curriculum Sustaining Home Ownership 23 nonprofit partners • Advocathtglenders an beheH of horrreotirners • Loan modificatlon and reflnandng counseling • Individualized foreclosure prevention twutuceang ~" • • • • ^ ~~ • 702 Forecbsures n 2009 • .Counseling Services: 357 Households • Foreclosures Prevented: 49% (170) • Foreclosure Not Prevented 48% (168) • Outcome unknown: 3% (9) Sherburne County Foreclosures ', ^ 2010 (Q1 & Q2} • 465 Foreclosures through Q2 2010 ff trend continues -32.5% Increase • Counseling Services Q2: 180 HH • If trend continues - 0.8% Increase 2 • Public education about scams - Communiryouireacb - Orgari:.ation partners - Online buireach ~,i • Targeting impacted communities - Exurban communities - Un-and under-employed communities - Limited English and immigrant communities - Seniors • • ~ • • • Engaging partners to sprea d the word. -More Ehan 80 to date - ^ Partners include: Advocates - Mousing leaders - HARP - 11RN Bankers Assoc. - hknong-American Partnership _ MN Housing Y dovemment LeaaMn - thus!»aasea - LYty of Brooklyn Park - Austin Mutuallnsurance -Rep. BettyA~k:CoNum -.WestemNationallnsuranoe '~` LSS Financial Counseling ,, Reports of cams are booming • Robbing homeowners of their savings, their home or both ~~ 1 SCBIne Report6tl M tMi k veaera~ rraao commioeron (Fl'C) z,~r r ~ 3 • • ~Ht~ra4 • Targeting Distressed Borrowers ~` • Using Federal or '~ Official-Sounding Names ®~ ~- ._ ?~~~ ^ Hiding in Plain Sight _ - -- ~> -' -°°~ ~ • • . • • • 4 • Charge fees for their services. • Ask you. to sign over title to your home'or even power of attorney. • Claim you should stop paying your mortgage during tNe loan modificaton process. • Claimyou should pay them, rather than your bank, during the modification process. • Promise a guaranteed outcome or claim they can help people in any situation. 2007 Law: Companies offering modifications must register with the Minnesota Department of Commerce - Oniy 10 registered to date ^ 2009 Law: Up-front fees are illegal in Minnesota - Attorney General Swanson has sued two companies under this law in 2010 :°.°~ ~,^^~~ ^ Hag the organizationtegistered with the Minnesota Department of Commerce as an " approved loan modification organization? • Does the organization charge a fee at any point in the work? • Does the organisation benefit financially from the course of action4hey are recommending? 4oak~ "°"~'~~ 5 .. .. • Talk to your ftiends and neighbors - We/p them `ee on the lookout" -Share the key questions _ • Connect homeowners to resources - www.LookBeforeYouLeap.org - Call (866) 462-6466 ~°: •~ • ~ ,• • • - • • Report what you see - Stay vigilant for scams in your community - Cafl the Attorney General's Office to report • Ask your employer to become a partner z Minnesota= : t Home Ownership Center p 651.659.93;6 • f 651.659,9518 Toll (ree 866.462.6466 www.nxmn.ory Look Before you leap 6 i~~ Look ~ Before you leap LOAN MODIFICATION SCAM ALE RT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651) 659-9336 Toll Free: (866) 462-6466 ~~ ~~~ ~ I I~~ ~ ii I ~ ~~~ #' i ` I ~ fhi i 1, ~~ ~~ii, ~ . fiore~lo~~~ r~~~tion s~ ~'~_ .s-~~ -, "Look Before You Leap" is at statewide public education campaign raising public awareness about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connecting struggling home owners with the state's network of free, trusted nonprofit foreclosure counselors. The effort engages local governments, nonprofits, community and business leaders, and citizens in preserving home ownership in Minnesota by calling attention to for-profit companies' unsavory techniques and offering home owners free alternative home preservation solutions. Partnership Expectations Partner organizations play a central role in Look Before You Leap's ability to reach home owners where they work and live, and lend invaluable credibility to the public education campaign. As a campaign partner, the Minnesota Home Ownership Center asks that your organization engage in the following activities: Stay in Contact • Dedicate a campaign liaison or contact person to receive regular communications. • Allow your organization's name to be listed as a supporter on the campaign website at www.LookBeforeYouLeap.org and in other communications. Spread the word • Include campaign information in internal newsletters or other communications wherever possible. • Invite a Look Before You Leap representative to give a presentation to your civic club meeting, organization or business meeting. • Include a link to LookBeforeYouLeap.org on your company website or in an electronic newsletter. • Share information about the campaign with your local elected officials and opinion leaders in your community as opportunities arise. Offer Your Ideas • Contact Julie Gugin (julie@hocmn.org) or Ed Nelson (ed@hocmn.org) with any ideas for the future of the campaign. Together, these simple actions will create a groundswell of awareness in the communities being hardest-hit by predatory foreclosure prevention scams. www. LookBeforeYouLeap. org LookBeforeYouLeap.org I~~ Look Before you leap LOAN MODIFICATION SCAM ALERT Everyone benefits from preserving home ownership. Each foreclosure results in total costs of up to $78,000 for neighboring home values, local governments, lenders and home owners are accounted for, according to the Joint Economic Committee of Congress. With such expansive costs, we all pay the costs of foreclosures - and we all benefit from their prevention. Preserving home ownership starts with protecting home owners from predators. Today hundreds of for-profit companies are marketing false promises of guaranteed foreclosure prevention to home owners. Unfortunately, these wolves in sheep's clothing are stripping home owners of their savings, their home, or sometimes both. Minnesotans are already struggling enough in the current economy; they should not have to bear the additional burden of warding off predatory scams, too. Struggling home owners have a right to free, trustworthy services. Many home owners in danger of foreclosure are also struggling with a job loss, mounting medical bills or other stressors that have pushed mortgage payments out of reach. Home owners have the right to expect quality, free and trustworthy foreclosure prevention services from a network of trained mortgage professionals as an alternative to the predatory scams. In Minnesota, this network is coordinated by the Minnesota Home Ownership Center. Goal "Look Before You Leap" is a statewide public education campaign that empowers home owners to spot deceptive scams and to protect their most precious asset -their home. The effort engages local governments, nonprofits, community and business leaders, and citizens in preserving home ownership in Minnesota by calling attention to for-profit companies' predatory techniques and offering home owners free alternative home preservation solutions. Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651)659-9336 ToII Free: (866) 462-6466 ~u+ding ~rincipies Overview One in every 20 Minnesota homes was foreclosed upon between 2005 and 2009. As foreclosures continue to mount, for-profit foreclosure prevention scams have arisen to prey on struggling home owners at their weakest. In fact, the scams have boomed from only one reported to the Federal Trade Commission (FTC) in 2008, to 7,927 in 2009. At best, these companies charge money for services otherwise available for free. At their worst, they require enormous up-front fees or ask for the home title, only to leave the home owner in an even worse situation than before. Guiding principles "Look Before You Leap" is a statewide public education effort based on three key principles: LookBeforeYou Leap.org NAME: ORGANIZATION: ADDRESS: ^Ty; STATE: ZIP: PHONE: EMAIL: ~ f~}~ ~LL r• ,._. r ''~'1 ~ .,~, ~/~ 3> Partners ~~~~c~~~~ ~~ ~~_ -~~~~ Look a ~ ,, '- Loak Before Yt~u ~ea~ ` ~~~ ~~.~ Before you leap -a .. . ' ~ • ~ rrLOOk Before You Leap" is at statewide public education campaign raising public awareness ~ ~ about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and connecting struggling home owners with LOAN MODIFICATION SCAM the state's network of free, trusted nonprofit foreclosure counselors. The following ALE RT organizations are advocates for homeowners and have taken a stand against foreclosure prevention scams in Minnesota: AARP 360 Communities Arrowhead Economic Opportunity Agency Austin Housing & Redevelopment Authority Austin Mutual Insurance Company Bremer Bank Burnsville Chamber of Commerce Capital City Partnership Carver County Community Development Agency Catholic Charities Financial and Housing Counseling of Saint Cloud CCCS of The Village Family Service Center Central Minnesota Housing Partnership Centro City of Brooklyn Park City of Elk River City of Minneapolis, Community Planning & Economic Development City of St. Paul, Planning & Economic Development CLUES Comunidades Latinas Unidas en Servicio Coldwell Banker Burnet Community Action Partnership Suburban Hennepin Community Neighborhood Housing Services, NeighborWorks® Home Ownership Center Community Pride Bank Concord Printing Congresswoman Betty McCollum Dakota County Community Development Agency Dakota County Regional Chamber of Commerce Dayton's Bluff Neighborhood Housing Services East Central Regional Development Commission Minnesota Home Fannie Mae Ownership Center FDIC 1000 Payne Avenue, Suite 200 First Home Network St. Paul, MN 55130 Ph: (651)659-9336 Greater Minnesota Housing Fund Toll Free: (866) 462-6466 Heartland Community Action Agency LookBeforeYouLeap.org Hennepin County Foreclosure Task Force Hispanic Chamber of Commerce Minnesota Page 1 of 2 f= i~ Look Before you leap LOAN MODIFICATION SCAM ALERT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651)659-9336 Toll Free: (866) 462-6466 LookBeforeYouLeap.org }> Partners up~porting Loy 3efore You Leap ~. `r ~? "Look Before You Leap" is at statewide public education campaign raising public awareness about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and connecting struggling home owners with the state's network of free, trusted nonprofit foreclosure counselors. The following organizations are advocates for homeowners and have taken a stand against foreclosure prevention scams in Minnesota: Hmong American Partnership Rebuilding Together -Twin Cities Housing Preservation Project Rochester Olmsted Community Initiative Foundation Housing Partnership Inter-County Community Council Rondo Community Land Trust Kim Skobba Consulting, LLC SE MN Association of Realtors® Lao Assistance Center of Minnesota Senator AI Franken Legal Aid Society of Minneapolis Southwest Minnesota Housing Partnership LSS Financial Counseling St. Cloud Housing and Marilyn Bruin, Associate Professor, Housing Redevelopment Authority Studies Program, College of Design, St. Paul Area Association of Realtors® University of Minnesota Metropolitan Consortium of Community TCF Bank Developers Tri-County Action Program, Inc. Minneapolis Urban League (Tri-CAP) Minnesota Association of Realtors® Tri-Valley Opportunity Council Minnesota Bankers Association Tubman Minnesota Department of Commerce Twin Cities Community Land Bank Minnesota Foreclosure Partners Council Twin Cities Habitat for Humanity Minnesota Housing US Bank Minnesota Housing Partnership USDA Rural Development Minnesota Mortgage Association Volunteer Lawyers Network MN Credit Union Network Washington County Housing and Redevelopment Authority Neighborhood Development Alliance Wells Fargo Neighborhood Housing Services of Western National Mutual Minneapolis Insurance Company NeighborWorks® America Wright County North Metro Realtors® Association Wright County Community Northwest Community Action Program Action Program PRG, Inc. Page 2 of 2 ~~~ Look ~ Before you leap LOAN MODIFICATION SCAM ALERT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651)659-9336 Toll Free: (866) 462-6466 ~~ ~~~ ~o~~C~os~~ s~an~~ ~n ~~~~sota The foreclosure prevention scam "industry" did not exist three years ago, but by the end of 2009 business was booming in Minnesota and nationwide. The Federal Trade Commission recorded only one complaint of "mortgage modification and foreclosure relief scams" in 2008. But in 2009, the agency received 7,927 complaints nationwide. Signs of Scams No one knows the full scope of foreclosure prevention scams because such companies rarely register with the appropriate legal authorities and can often go unreported by the homeowners they target. However, these scams often share several unsavory characteristics, such as: Tricks of the trade Foreclosure prevention scams are as numerous as the companies who perpetrate them, but most follow one of four trends: 1. Phantom Help. A fraudulent company collects an up-front fee from home owners trying to save their homes from foreclosure, and then disappears. ^ Targeting Distressed Borrowers. Scamming companies tend to focus their direct mail, flyers and other publicity efforts in communities with high concentrations of adjustable rate mortgages or sub-prime loans, among seniors, and in poor and limited English communities. ^ Using Federal and Official- Sounding Names. Names like "Federal Loan Modification Law Center," "Hope Now Modifications, LLC,"and "Bailout.hud-gov.us" strive to create false connections to legitimate federal home owner assistance programs. Scam company websites also often feature falsified logos from the Better Business Bureau, the U.S. Department of Housing and Urban Development (HUD) and other reputable agencies. Hiding in Plain Sight. Scam companies rely on highly-visible web, radio and newspaper advertising, along with direct mail and distributed flyers, to promote their for-fee services. More troubling still, the advertisements strive to make the Scamming companies resemble the free, trusted nonprofit foreclosure prevention services that are available to area home owners. 2. Bankruptcy Foreclosure. Stammers promise to negotiate with the lender for refinancing on the consumer's behalf. Instead of contacting the lender or refinancing the loan, the scam company pockets the fee and files for bankruptcy in the consumer's name -sometimes without the consumer's prior knowledge. 3. Lease Buy-Back. A home owner facing foreclosure signs over the deed to a company or individual who promises to buy it and then sell it back at a later time when home owner finances are in order. The home owner is promised that they will be allowed to rent the property in the interim. However, when the company or individual takes over, they evict the original home owner, stripping them of their home and equity. 4. Reverse Mortgage. A home owner who has lost income is offered a loan for monthly payments from the equity of their home. While sometimes legitimate, stammers often use this approach to charge sky-high fees and, at times, take immediate ownership of the home. No matter the approach, for-profit foreclosure scams unnecessarily strip homeowners of their limited resources and often increase a homeowner's danger of foreclosure by delaying real help. If you see a potential stammer, call the Minnesota Attorney General's Office at (800) 657-3787 to report their questionable work. LookBeforeYouLeap.org ~~~ Look ~ Before you leap LOAN MODIFICATION SCAM ALERT Minnesota Home Ownership Center 1000 Payne Avenue, Suite 200 St. Paul, MN 55130 Ph: (651)659-9336 Toll Free: (866) 462-6466 ~/ ~~+`1 "Look Before You Leap" is at statewide public education campaign raising public awareness about the booming mortgage rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connecting struggling home owners with the state's network of free, trusted nonprofit foreclosure counselors. It is led by the Minnesota Home Ownership Center, in partnership with NeighborWorks® America and continues to build support from organizations across Minnesota: 1. Mortgage foreclosure scams are booming The Federal Trade Commission (FTC) received only one complaint of a foreclosure scam in 2008. But by the end of 2009, the number of complaints swelled to 7,927. 2. Scams Strip home owners of their savings, their home... or both At their best, for-profit companies charge home owners thousands of dollars for help that is already available in Minnesota for free. At their worst, scams are robbing already vulnerable home owners of their home, their life's savings, or both. 3. Everyone benefits from stopping foreclosures Each foreclosure costs over $78,000 when totaling the costs to neighbors, home owners, cities and lenders according to the Joint Economic Committee of Congress. ~~ Be On °~e iLcu~couf For .~. Be wary of companies offering help that... • Charge fees for their services • Ask you to sign over title to your home or even power of attorney • Claim you should stop paying your mortgage during the loan modification process • Claim you should pay them, rather than your bank • Promise a guaranteed outcome or claim they can help people in any situation 4. Stopping foreclosures starts with ending scams Predatory stammers often hide in plain sight with ads on the radio, online and in our communities. Help put an end to predatory scams by reporting them to the Minnesota Attorney General. S. And turning home owners to real local resources they can trust Struggling home owners should contact the statewide network of 24 non-profit agencies who offer FREE foreclosure relief and credit counseling to Minnesotans statewide. Go to www.LookBeforeYouLeap.org to find a counselor near you. ?) Kpow The Answers To ... Before agreeing to work with any company for mortgage help, know the answers to these questions: • Has the organization registered with the Minnesota Department of Commerce as an approved loan modification organization? • Does the organization charge a fee at any point in the work? • Does the organization benefit financially from the course of action they are recommending? LookBeforeYou Leap.org