Ms. Smith, a school teacher having difficulty paying her mortgage, had been seeking a loan modification for over 2 years. Bank of America would not budge. Instead, in early 2012 it filed for foreclosure.
Surprisingly, on October 2, 2013, Ms. Smith received an approval letter stating:
‘The new loan terms of your pending modification will be as follows, 30 year fixed with a new maximum monthly payment of $732.68… You will be required to pay 3 trial payments for December, January and February, 2014. Your lender is requesting a Reinstatement Fee on your loan of $2,025.77, due no later than 10/04/13. Please see below for mailing and check instructions. The payment must be made by certified funds only. Please contact your case manager with any additional questions.’
Ms. Smith was ecstatic. She immediately called the number in the letter and spoke to her case manager. He told her to hurry because if the check was late she might lose the modification. She sent the Cashier’s Check for $2,025.77 the next day by Federal Express. It was a lot of money, but Ms. Smith could not have been happier to send it! After all she had been through, the struggle was finally over. She would not lose her home!
Three months later, Ms. Smith received a letter about her foreclosure case. Her home had been sold, without her knowledge, at a foreclosure auction on October 14, 2013, just 10 days after she had sent $2,025.77 to Bank of America. She must leave her home, or be evicted, in a month.
How could this be? There must be a mistake. Her loan had been modified. Or had it?
No, her loan had not been modified. The letter was a fake; part of a simple, but effective scam. Ms. Smith, a distressed homeowner anxious for a loan modification, was a perfect target for this scam. Most of the millions in foreclosure would fit this profile. Now Ms. Smith would lose her home, after already losing thousands of dollars to thieves claiming to be representatives of Bank of America.
Any good attorney would probably have recognized the letter as a fake, or at least have been very suspicious. That’s one of the benefits of having professional help with your loan modification application. However, Ms. Smith lived alone, and did not use an attorney for the foreclosure defense or loan modification application. She had no one to consult, so she called the bank… or so she thought.
One simple way to avoid this happening to you: If you get an offer for a loan modification, contact the bank at a different number than that shown on the offer letter. Use the telephone number from an old mortgage statement, or Google “Bank of America Mortgage Assistance” and call that number. Your bank will provide the details of any current loan modification offer, if there is one. If you learn there is no “real” loan modification offer, call your Attorney General’s office immediately.
Finally, it is said that if something seems too good to be true, it probably is. That’s not the case with loan modifications, many of which have been spectacular over the last few years. So, don’t ignore that spectacular loan modification offer just because it looks too good to be true, but do call your bank (at a number not on the offer letter) and verify the terms before sending any payments.
Author Rick Rogers, JD/MBA is the Managing Attorney for the Rogers Law Group, a Law Firm dedicated to Home Preservation via Foreclosure Defense, Loan Modification, Mediation, and Bankruptcy. He has instructed hundreds of attorneys across the nation on HAMP and Loan Modification Best Practices. He may be contacted at firstname.lastname@example.org or through www.therogerslawgroup.com .