By James Limbach
ConsumerAffairs.com
September 22, 2009
The Federal Deposit Insurance Corporation has released a free tool kit of information designed to help homeowners and lenders avoid unnecessary foreclosures and stop foreclosure "rescue" scams that promise false hope to consumers at risk of losing their homes.
The tool kit includes critical information to help borrowers know who to contact and what documents they need to have available to apply for a loan modification that could save their home from foreclosure. It also describes the warning signs of potential foreclosure "rescue" scams and how consumers, community stakeholders, and bankers can report scammers and prevent fraud.
To ensure this information is widely available, the FDIC is conducting outreach to community-based organizations and the banking industry, and furnishing a referral service to help consumers identify sources of legitimate help and report fraud to the appropriate law enforcement agencies.
"It is vitally important that consumers and bankers know all of the resources available to help prevent unnecessary foreclosures. The tool kit released today, along with our outreach, should help consumers know how to get a loan modification when they need one. While reaching out a helping hand, we must also be on guard for those who would prey on consumers who are facing foreclosure," said FDIC Chairman Sheila C. Bair.
"Everyone with a stake in this issue -- from community leaders to those with a neighbor, friend or family member facing hardship -- must take responsibility for reporting questionable activity and directing consumers to legitimate sources for assistance," Bair said. Raising consumers' awareness of foreclosure "rescue" scams will give borrowers more confidence in knowing they are working with legitimate counselors and servicers to obtain a loan modification that could help them avoid foreclosure.
Anyone who has been paying attention knows that foreclosure has been driving consumers to distraction.
• Susan from Marietta, Georgia tells ConsumerAffairs.com that she got caught in a red tape nightmare after receiving a foreclosure notice in June, She called Litton, the note holder and says she was told "as long as it was in review the home would not be foreclosed on. Called in July and was told one of the forms I sent in April was not filled out correctly to resend. Did so. Was again told that as long as my file is being reviewed the home would not be foreclosed on. Received foreclosure notice for Aug. Called and spoke to a rep who told me that I had been misinformed. That just because my case was in review that didn't stop the foreclosure. I had to call two weeks before the scheduled sale and ask for it to be stopped, but they had all of my paperwork and it looked in order. Called last week and was told that one of the same form I was told to refax because it was filled out wrong, was the wrong form and I needed to fill out another form 4506T and fax it to them."
• Krista of Owatonna, Maine, told us that she and her husband were on a forbearance with payments due every six months. "We made all 5 payments on time and our 6th and final payment was rejected from Chase and sent back to us. We immediately called them and was told initially that they had 2 dates for the last payment. One in March and the one we thought in April." She says that within two weeks foreclosure papers were again served. "We have yet to even get an answer as to why we had our last forbearance payment rejected, and now the last time I called I was accosted for asking too many questions. We are very upset and concerned because Chase has yet to answer ANY of our questions. Oh and their computer system seems to go down quite often, too."
The FDIC's foreclosure prevention tool kit, which is aimed at helping consumers avoid these kinds of hassles, includes:
• Is Foreclosure Knocking at Your Door? brochure (available online and in print), which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor.
• Beware of Foreclosure Rescue Scams brochure (available online and in print), which provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.
• Spring 2009 edition of FDIC Consumer News, which features advice for consumers on avoiding foreclosure rescue and loan modification schemes.
• Your Own Home module of the FDIC's Money Smart curriculum, which offers tips and advice on avoiding foreclosure with a loan modification, preventing foreclosure "rescue" scams and providing legitimate sources of foreclosure prevention assistance.
Also as part of this initiative, the FDIC is continuing to work with banks and community-based and consumer organizations to avoid foreclosure and stop foreclosure "rescue" scams, particularly in underserved communities. Consumers are encouraged to report questionable activities, including solicitations or offers, to their servicer and appropriate state and federal authorities, which may include the Federal Trade Commission and the appropriate state attorney general.
Consumers who have difficulty finding contact information for these officials or their servicer may receive a referral by calling the FDIC Call Center at 1-877-ASK-FDIC (1-877-275-3342) or visiting www.fdic.gov.
