Exiled Nigerian princes are old hat.
The hottest come-on these days, clogging e-mail in-boxes, voice mail and radio airwaves, goes something like this: "Are you struggling with your mortgage? President Obama approved the new federal loan modification program. We can help lower your mortgage payment."
It's the foreclosure-rescue scheme, given up-to-the-minute credence by the fact that the president has in fact endorsed loan modifications, the reworking of home loans to make them more affordable.
Scores of individuals and companies have sprung into action, marketing their services to help homeowners stave off foreclosure. They charge thousands of dollars and promise to deliver huge monthly savings on mortgage payments.
With a record 5.4 million U.S. homeowners behind on mortgage payments, according to the Mortgage Bankers Association, the pool of people desperate for help is huge.
But the services these "loan negotiators" provide generally are steps homeowners could take themselves, with little or no help. Those steps include contacting their lender, assembling their financial documents and writing a letter demonstrating hardship.
For those who want assistance, free help is available from counseling agencies supported by the U.S. Department of Housing and Urban Development or the industry-backed HOPE hot line. And no one other than a lender can guarantee that a homeowner will qualify for reduced payments.
"People are in such a desperate place that it's low-hanging fruit," said Lisa Sitkin, an attorney with Housing and Economic Rights Advocates in Oakland, Calif. "We get calls (all the time) from people who paid someone to modify their loan" and never got the assistance.
Some loan-modification consultants legitimately do try to negotiate lower payments. Many are former real-estate agents, mortgage brokers or title agents.
Aaron Ralls, a former corrections officer, works as an account executive for RJV Modifications, a Roseville, Calif., company that charges $3,885 for a loan modification. The 17 account executives who handle loan modifications are paid on commission. He declined to state the amount.
Ralls said his company returns clients' money if it cannot secure them a lower mortgage payment, and turns away clients who seem unlikely to qualify for a modification because they don't have enough income.
"Whenever clients ask if they can do it themselves, I tell them, 'You absolutely can, but it's very hard because you get the runaround,' " he said. "You're calling the phone centers, getting the runaround, chasing fax machines. We do it all for the client."
Nasim Pakmanesh, production manager at Help-U-Mod in Walnut Creek, Calif., said his company's business model is to provide "forensic loan audits" for $1,500, then to refer clients to affiliated attorneys who charge about $1,000 to pursue a loan modification. He said the audit looks through the original loan documents to discover errors made when the loan was originated.
With the audit, "the attorney has more ammo to work with to negotiate for their clients," he said. "Instead of going in and saying, 'My clients can't afford the home and have a hardship,' they're saying, 'You guys approved a loan you shouldn't have -- so what can you do for my clients?' Our audit will definitely increase the chances" of getting a loan modification.
But Sitkin said she doesn't think forensic loan audits accomplish anything beside sounding impressive.
"People are really proud when they tell me that they got it, but it's a false hope that it will stop foreclosure," she said.
Norma Garcia, a senior attorney at Consumers Union, said she is troubled that the loan-mod services are basically unregulated.
"Often it's not illegal to do what they're doing, but our concern is that some of the people who caused the mortgage meltdown are now profiting from it," she said. "It's a feeding frenzy in a loop. They're taking advantage of uninformed consumers to get money out of their ignorance."
Some loan-mod agents are out-and-out scammers.
"A lot of sham companies and con artists promise these vulnerable homeowners that if you just give us some money, we can do a loan modification, you can stay in your house and get your payment reduced," said Tom Pool, a spokesman for the California Department of Real Estate. "It is troubling that they're preying on those who don't have money to begin with. In many cases, the consumers use their credit card to pay the fees."
(E-mail Carolyn Said at csaid(at)sfchronicle.com.)
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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