State warns of foreclosure `consultants'

September 26, 2006|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Vicki Randles, saddled with debt from breast cancer treatment and in danger of losing her Middle River home, thought she had signed a contract for a loan to get herself back on track. Instead, she'd signed away her home.

State regulators stepped in and managed what she thought would be impossible: They helped her get it back from the "foreclosure consultants" who had tricked her. Randles, 48, just received notice that her name is again on the deed after a yearlong ordeal.

But many people in similar situations have not been so fortunate. The state, which scheduled a press conference today about her case, is warning homeowners to be wary of so-called experts offering help. Some are con artists.

"If you go to these unscrupulous foreclosure consultants, they are going to take your equity, they're going to take your title to your home and you're going to be out in the cold," said Calvin Wink Jr., an investigator with the state Department of Labor, Licensing and Regulation's financial regulation enforcement unit who worked on Randles' case.

State legislators passed a law last year requiring foreclosure rescue firms, among other things, to clearly disclose terms, and Randles' attorney, Mike Morin, said it was critical in the effort to get her home back.

State officials are pursuing a cease-and-desist action against the company.

They declined to name the firm until the order is final.

But Morin and others worry that the problem will balloon in the next few years. Foreclosures are expected to rise as higher interest rates pinch more cash-strapped homeowners with adjustable-rate mortgages. The five-year housing boom that pushed values skyward in the Baltimore region only adds to the problem.

"There are so many people who are cash-poor but equity-rich in their homes," said Phillip R. Robinson, executive director of Civil Justice Inc., a nonprofit group in Baltimore that handles a lot of predatory real estate cases. "These kinds of schemes are increasing."

Randles said her experience was so stressful that she suffered from depression, panic attacks and a lagging recovery from the cancer. A bookkeeper by profession, she's still berating herself for getting scammed. She said she had no idea in July last year that she was signing a deed giving the company control of her house rather than a "deed of trust" necessary to use the home to secure a loan.

Randles had needed help. At the end of 2004, too ill to work, she lost her job. She fell behind in her mortgage payments and faced foreclosure proceedings.

The foreclosure-consultant company she picked out of the many that offered assistance gave her a bit more than $20,000 to pay off her medical debts and past-due mortgage bills. She then sent her monthly mortgage payments to the consultants. It was only because they were late forwarding the money to her mortgage company that she took another look and discovered the bad news: She no longer owned the home, she was renting it - and if she didn't buy it back, she'd be on the street by the end of 2006.

She had less than $60,000 left on the mortgage for her end-of-row brick townhouse, appraised for about $180,000.

"I'm one of the lucky ones because I still have my home," said Randles, who bought it in 2000. "These kinds of people just feed off people in vulnerable situations."

Mortgage delinquency rates are lower here than in most states. Maryland homeowners were at least 30 days behind on payments on 3.3 percent of loans in the second quarter of this year, compared with 4.4 percent nationwide, according to the most recent numbers from the Mortgage Bankers Association.

But that's still more than 30,000 individuals or families who are behind, some portion of whom will eventually face foreclosure.

"I think that by this time next year, there are going to be a lot of people in that situation," said Wink, the investigator, who worries about homeowners with interest-only and other "exotic" mortgages.

Already, Morin said, the Baltimore-Washington area is rife with mortgage fraud. It's to the point that he's seeing "hobby con artists," people doing it in their spare time.

Bob Adams, a foreclosure consultant in Owings Mills, said the industry isn't just con artists. He believes the law passed last year pushed out a lot of "shady" operators. Adams said he's never ended up with a client's home and offers his clients contracts that specifically state he will not purchase their property even if they decide to sell it.

Homeowners can also seek help from nonprofit housing counselors, said Robinson, with Civil Justice. The Maryland attorney general's office keeps a list of organizations, hoping to steer residents away from what it calls foreclosure sharks.

Randles, amazed and elated to have the deed to her house once more, hopes people in financial trouble learn from her travails. "Through all of this, my intention was not to let this happen to anyone else," she said.

What to do

Steps to take if you are behind on mortgage payments:

Call your mortgage company.

Lenders can lower your payments temporarily.

Seek legal help.

An attorney can contact your lender on your behalf and offer advice. Sometimes the best option is to sell and find a cheaper home.

Get other assistance.

The Maryland attorney general's office keeps a list of nonprofit housing counseling organizations; for information, call 410-576-6300 or go to

Don't sign any paperwork immediately.

If you choose to contact a for-profit mortgage consultant, show any contracts to an attorney or someone you trust.

If you think you've been defrauded,

call the attorney general's consumer protection division, 410-528-8662.

[Sources: Maryland Department of Labor, Licensing and Regulation; Maryland attorney general's office]

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