If you have recently experienced a foreclosure, there is a chance you were a victim of foreclosure fraud. When a homeowner falls behind on mortgage payments, mortgage companies enforce payment plans to limit the damage to the property and take payments on time, postponing the date when the bank would sell the property to realize its mortgage debt. When the owners fall behind for even a short time, the mortgage companies will foreclose on the house, evict the homeowner, and auction off the house – all within a ninety-day period from the date of the original foreclosure claim.
But often, homeowners receive letters demanding them to pay a monthly fee ($100 or more) for a service that they did not provide. After answering the high-pressure sales pitch, some owners find that similar fees have been added to their mortgage – in addition to other late fees, interest charges, default fees, attorney fees, and court costs. And often, the new charges are greater than the previous fees.
Because loans are sold in fractional amounts to investors on a daily basis, many times a home loan could easily have been sold several times, increasing origination fees, and causing hundreds of additional dollars in fees to be passed back to the owners. Renters would never notice because foreclosure victims typically only receive a letter demanding a monthly payment, along with a sea of legalese stating that their loan is being sold and the owners are responsible for all fees. If owners started receiving these letters from servicing companies, the owners would no longer be able to pay the mortgage or save their home from foreclosure.
Servicing companies typically collect late fees, penalties, attorney fees, and court costs, and add these charges to the mortgage principal and interest charges, while neglecting to notify owners of these charges. And often, this neglect results in the servicer not collecting late payments, allowing the loan to get seriously delinquent.
Also, servicing companies often maintain non-defaulted loans, which means that they do not inform owners of frozen or defaulted loans. These loans are actually owned by Endowment and Life Company, National Life and Trust, and do not belong to the mortgage company issuing the mortgage, but rather, the company is responsible for servicing the loan. Once a payment has been missed and the loan is in default, the company is responsible for starting the foreclosure process and exploring all options to reinstate the loan – even including evaluating foreclosure fraud.
Therefore, before signing a modification, owners should be aware of the scams that exist on the foreclosure modification scene. While the government encourages banks to work with homeowners to prevent foreclosure fraud, they do not play a large role in serving as a clearinghouse for servicing companies’ procedures.
The company that buys homes will never know what they’re signing unless they read the fine print carefully. But in the end, owners need to verify all revenues from the foreclosure cleaning services, especially if the same company is charging several times the amount that the mortgage payment was authorized for, without informing the owners. Homeowners can keep thousands of dollars in their pockets if they choose to inspect Foreclosure Cleaning Company contracts in a professional manner.