From FoxBusiness: a look at the legislation Congress is mulling over to give bankruptcy judges more authority to modify residential mortgages.

Have you ever heard those radio commercials touting "debt elimination?" It usually has an announcer proclaiming that "my plan does not reduce your debt, it eliminates it!" One commercial in particular on a local station also has a speaker who says "using this system, I will be able to pay my 30 year mortgage in just three years making only the money I am making now." That sure does sound too good to be true. Well, it was a bad week for two scam artists from California who ran such an out. The Mercury News reports that on Tuesday they were sentenced to more than 25 years in prison for mail fraud.

Actually, this bit is yesterday's news, but it's worth mentioning: The New York Times reports that the mortgage crisis is not only affected lower and middle income borrowers. According to the report "affluent consumers with annual incomes of $100,000 or more ... are increasingly being ensnared in the home mortgage crisis."

And finally, here's something we might want to think about this weekend: is the US Dollar on its last leg?

Posted by Bill McLeod at 11:21 AM | Permalink | Comments (0) | TrackBacks (0)

Earlier this week I was talking with a client who let me know that their home was headed into foreclosure. I was a bit surprised to hear this because I had been led to believe that there was no problem making the home mortgage payments, only the other debt (which included other real estate). I was also surprised to learn that this problem had been going on for a few months. And I was even more surprised to learn that the clients had been working with a mortgage broker. But what really surprised me was why I was only learning about this now.

Apparently, the clients had been solicited by a mortgage broker who assured them they need not file bankruptcy. He assured them that they would refinance the house and avoid bankruptcy. He also told them not to discuss this at all with me: their bankruptcy attorney.

For reasons that only they can explain, the clients chose to follow that advice. And unfortunately, they may pay a price for doing so: they risk losing their home, and they have complicated their bankruptcy filing and made it more expensive. I write about his with the hope that this error will serve as a cautionary tale to others in a similar situation.

Mortgage brokers get paid a commission based on the mortgage they obtain. If they do not obtain a mortgage, they do not get paid (although some may charge non-refundable applicable fees). If a mortgage broker is able to get financing, no bankruptcy attorney is going to dissuade a consumer for taking it…unless the mortgage product (or the act of refinancing itself) is going to place the client into an even more precarious financial position. With that said, the only reason why a mortgage broker would be concerned about a client talking with an attorney is if the attorney attempted to talk the consumer out of the mortgage….and the only way I see that happening is if the attorney is doing his or her job by protecting the client.

If you’re trying to refinance and are speaking with mortgage professionals, please do yourself a favor and speak with an attorney. If any of these professionals urge you not to speak with an attorney of your choosing, do not do business with them. There is no harm in speaking to your attorney, but there can be great harm to you and your family if you follow the recommendations of someone whose interest is not the same as yours.

Posted by Bill McLeod at 3:31 PM | Permalink | Comments (0) | TrackBacks (0)

I have written about so-called "debt settlement" companies that tout a benefit of paying off your debt quicker and cheaper. In the long run, consumers are left with less money and still at the door of the bankrutpcy court.

From the March 6 issue of Business Week:

The booming business has caught the attention of prosecutors and regulators, who say such programs can leave consumers in worse financial shape. Fees for the services run high. And when banks don't agree to settle—if the settlement firm contacts them at all—consumers get hit with late charges and penalized with higher interest rates, leaving borrowers with even more debt than when they started.

You may have missed...

"Be Debt Free in only 18 months!"
Thinking about Debt Settlement? Think about this...
And Speaking Of Credit Counseling Predators...
Credit Counseling Predators

Posted by Bill McLeod at 10:39 AM | Permalink | Comments (0) | TrackBacks (0)

The foreclosure crisis sweeping the nation is also sending some mortgage companies into financial ruin, leaving many folks caught in the middle. Last week the Federal Trade Commission issued a new publication giving consumers advice on what to do if their mortgage company files bankruptcy.

The PDF of "How to Manage Your Mortgage If Your Lender Closes or Files for Bankruptcy" can be found here. There is also information how to obtain the publication by mail.

Posted by Bill McLeod at 12:45 PM | Permalink | Comments (0) | TrackBacks (0)

There are ads on local radio stations that make this declaration. Earlier this month, the Federal Trade Commission filed a lawsuit in New York against a couple that operated a variety debt settlement companies: The Debt Settlement Company, The Debt Elimination Center, Pay Help, Inc., Money Helps and Edge Solutions. According to the FTC, unsuspecting consumers looking for help visited websites such as idebthelp.com and moneycares.com and lured into a "debt meltdown program." According to the FTC,

The complaint alleges that, as a result of being in the defendants’ program, many consumers experience substantially increased debt because of late fees, finance charges, and overdraft charges, and suffer damage to their credit rating because of significant negative information such as late payments, charge-offs, collections, and garnishments, all of which may appear on their credit report for up to seven years.

Read more from the Arizona Republic.

Read more from the Federal Trade Commission.

Posted by Bill McLeod at 4:43 PM | Permalink | Comments (0) | TrackBacks (0)

Attorney General Martha Coakley announced yesterday that a settlement has been reached with five lenders involved in a foreclosure rescue scheme. The lenders involved are First Horizon Home Loans; Option One Mortgage Corp.; Wells Fargo Bank, N.A.; America Brokers Conduit; and Ocwen Loan Servicing, LLC.

More on the settlment can be found here.

Posted by Bill McLeod at 12:51 PM | Permalink | Comments (0) | TrackBacks (0)

People explore all of their available options before filing bankruptcy. Bankruptcy is not for everyone struggling with debt. Some may benefit from credit counseling, while others may benefit from loans from family members. However, there is one option that I am pretty sure does not work for most people I meet: “debt settlement” companies. In many cases, I have represented people who unsuccessfully tried this option and only ended up losing their money and adding to their stress. A conversation I had today with a prospective client reminded me that these "debt settlement" companies are still lurking out there, and people struggling with debt need to think about these issues before signing on the dotted line.

Continue reading "Thinking about Debt Settlement? Think about this..." »

Posted by Bill McLeod at 2:54 PM | Permalink | Comments (13) | TrackBacks (1)

Clients have been kind enough to share with me some of the many letters and solicitations they receive from people and companies who have learned of their looming foreclosure. Actually, to be more accurate, clients tell me they are deluged with these letters. Some of these letters offer assistance and provide truthful and accurate information. Others however, are clearly designed to mislead.

Recently a co-called “US agency” (who for now will remain nameless) sent a letter to a client declaring this:

Bankruptcy stops foreclosure but you will lose your home. (Note: Only 11% of bankruptcies are successful.

People facing foreclosure need to do their research and not rely on what one company, or a group of companies tells them. Unless a bankruptcy attorney who they have met with has told them that in no uncertain terms, bankruptcy is not an option, no one should assume that it is not. And companies who make such broad sweeping generalizations that are simply false should be avoided.

Posted by Bill McLeod at 2:03 PM | Permalink | Comments (0) | TrackBacks (0)

The Chief Economist for the Real Estate Center at Texas A&M University is warning struggling homeowners about foreclosure 'rescue' scams:

Here is how the scam works. The homebuyer gets behind on mortgage payments. The predatory lender offers a “loan to get caught up” on the delinquent mortgage payments. In exchange for the rescue, the homeowner signs over the title to the predator, who promises that the homebuyer may remain in the home while paying rent. The predator then sells the house to someone else, and the original homeowner gets an eviction notice.

Posted by Bill McLeod at 4:07 PM | Permalink | Comments (1) | TrackBacks (0)

Readers know that I have been keeping an eye on Kensington Assistance Agency: an obscure outfit that promises government grants to unsuspecting consumers who are able to cough up at least $298 for the pleasure of getting nothing in return. Readers have posted many comments about their experiences with Kensington, as well as another agency: Easton Consulting.

Commenters have posted similar experiences with Easton, namely, after giving them personal financial information (such as a bank account routing number, or even a social security number), the money is taken from their bank account, and the consumer gets nothing in return.

Today I received a comment from someone who claims to be a former employee of Easton Consulting:
Hi everyone,

I worked for Easton Consulting and no one gets a grant. Your government does not hand out free grants and that is a fact. I know, I inquired.

It's funny though that I tried to get in touch with the FBI and they said that they would do nothing, I emailed Oprah, 20/20, etc... and have not gotten a reply.

I unwittingly worked for them for two weeks (I guess the money prevented me from having my epiphany any sooner...groan).

I hope you realize that NO ONE gets the grant and it is nothing more than a scam.

I am sorry. Just to let you know, the company dupes about 500 people a week out of $349,97, and is this price a coincidence or is it $.03 difference between a felony and a misdemeanor?

Based on this email, Easton Consulting gets a McLeod Law Offices RIP-OFF ALERT! If you have been ripped off by Easton Consulting, or any other group that promises government grants for a fee, contact your local consumer protection office, and contact your local bar association for a referral to a consumer protection attorney near you. If you're in Massachusetts, feel free to contact me.

Finally, if anyone from Easton Consulting wants to respond to this comment or my comments please do so. Your side will be presented here and we want to hear it. We never heard from Kensington - but perhaps you'll step up and tell us why so many people claim to have been ripped off.

Posted by Bill McLeod at 5:44 PM | Permalink | Comments (1) | TrackBacks (0)

West Virginia Attorney General Darrell McGraw announced a settlement with Help Ministries Incorporated, d/b/a Debt Free, a credit counseling agency based in Mesa, Arizona. According to a statement released by the AG’s office:

Debt Free’s primary service consisted of arranging monthly payment plans known as “debt management plans” to assist consumers facing dire financial circumstances. West Virginia law caps the allowable fee for administering debt management plans at 7% of the monthly payment amount. However, Debt Free previously charged monthly service fees in excess of 7% as well as a one-time “set-up” fee that was not distributed to creditors. Debt Free also charged several other fees not permitted by West Virginia law, including a monthly fee for funds handling, a fee for “credit education,” and an administrative fee of $20.00 for failed electronic debits.

This is the third settlement with a creditor counseling company/debt agency in 12 months. The WV Attorney General’s office has also entered into settlements with Debt Management Credit Counseling Corp., of Boca Raton, Florida, and Cambridge Counseling Credit Corp. of Agawam, Massachusetts.

Posted by Bill McLeod at 12:11 PM | Permalink | Comments (0) | TrackBacks (1)

A new law will help consumers seeking credit counseling avoid those who claim to be “non-profit” agencies, when in fact, they are profiteers. However, the new law doesn’t take effect until next year. As reported by KOMO News Radio in Seattle, “…for now if you respond to a credit counseling ad, chances are you'll get someone looking to make a profit at your expense.”

This law follows years of abuse by so-called debt counselors and credit counselors who took large fees from consumers and then in some cases, did not pay a dime to creditors until they got paid.

On paper, the law sounds like it could work.

Under the new law, credit counselors will also have to do a complete review of your debt and income situation and your living expenses -- and tailor a plan that suits your financial needs so consumers who need help will be able to stick to a budget, get budgeting and debt management classes….

Will it work? Time will tell. But until the new law takes effect next year, please do your homework before selecting a credit counselor.

Posted by Bill McLeod at 11:58 AM | Permalink | Comments (0) | TrackBacks (0)

I have written about foreclosure scams all over the country.

If you think they are not happening in Massachusetts, think again.

From today's Boston Herald.

Posted by Bill McLeod at 12:02 AM | Permalink | Comments (0) | TrackBacks (0)

The IRS is slated to begin its "private debt collection initiative" on September 7. In other words, they are sending private debt collectors out to collect Uncle Sam's money. In anticipation of the occassion, the IRS issued a statement today entitled "Simple Steps Can Prevent tax Scams as Private Debt Collection Begins."

The IRS sees a variety of different scams on different issues. One recent example involves a bogus e-mail claiming to be from the IRS. In this “phishing” scheme, the scam artist’s e-mail claims to be from the IRS, tells recipients that they are due a federal tax refund, and directs them to a Web site that appears to be a genuine IRS site. The bogus sites contain forms or interactive Web pages similar to IRS forms or Web pages but which have been modified to request detailed personal and financial information from the e-mail recipients.

In general, all taxpayers should keep in mind the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts. If in doubt about someone claiming to be from the IRS or working on behalf of the IRS, call the agency’s toll-free help line at 800-829-1040.

Posted by Bill McLeod at 6:42 PM | Permalink | Comments (0) | TrackBacks (0)

This second post was prompted by Dana's comments to earlier post from this morning. While KAA's phones are busy and/or disconnected, they are apparently still trying to get money from folks by using their bank information.

Click here for Kensington Assistance Agency's website. There is a place on the site that enables viewers to "contact them" via email however, I could locate no phone number. I sent them a test email, and it appears to be working.

Please keep us posted. If you're located in Massachusetts, please contact me directly using the contact information shown at the right.

Posted by Bill McLeod at 2:47 PM | Permalink | Comments (3) | TrackBacks (0)

Months ago, I warned readers about Kensington Assistance Agency. Since then, reports have popped up all over the country with similar warnings about this outfit, such as this one from the NBC affiliate in Greenville, South Carolina.

Recently, I have been flooded with calls and emails from folks all over the country. When they call Kensington Assistance Agency, they get a fast busy signal. We do not know if they have packed up their offices and moved into another rat-hole, or if they chose not to pay their phone bill with the hundreds of dollars they have been swindling from folks who can least afford to lose it.

If you have been victimized by Kensington Assistance Agency, here’s what you should do:

Contact your local Attorney General’s Office or Office of Consumer Protection. This is usually a state agency.

Contact your local bar association and get a referral for a local attorney who concentrates in consumer protection and consumer rights. You may have rights under your local state laws.

Earlier posts:

Rip Off Alert: Another Update on Kensington Assistance Agency
Rip Off Alert! Update: Kensington Assistance Agency
Rip Off Alert!: Kensington Assistance Agency

Posted by Bill McLeod at 9:43 AM | Permalink | Comments (2) | TrackBacks (0)

Five people have been indicted in a foreclosure scam coming out of Southern California.

From DailyBreeze.com:

The defendants visited homeowners defaulting on their mortgages and offered to stop their foreclosures with short-term loans and refinancing options. But instead of applying for refinancing, the defendants allegedly submitted loan applications to banks under the names of the homeowners.

The defendants allegedly pocketed the loan money from the banks, which were never repaid. The victimized homeowners, meanwhile, lost their property titles, according to the indictment.

Posted by Bill McLeod at 5:14 PM | Permalink | Comments (0) | TrackBacks (0)

Foreclosures continue to spike here in Massachusetts, and nationwide. There are a number of bottom-dwellers out there preying on people who may be facing a foreclosure. According to a report from today’s Winston-Salem Journal, these scams on rising all over the country. The president and chief executive of the local Better Business Bureau had this to say:

"At-risk homeowners are bombarded with offers...Just take a look at the signs at the nearest phone pole or intersection. Smooth-talking salespeople appear everywhere, eager to buy your property and promising to 'save' your home by paying off the amount that is overdue on the loan."

He said that homeowners are often talked into moving out and deeding the property over to a third party, who tells them they can rent the property with the option to buy it back later. But the rent payment is often higher than the homeowner can afford. If homeowners decide to buy back the property, the price is typically too high for them.

Posted by Bill McLeod at 12:05 PM | Permalink | Comments (0) | TrackBacks (0)

More good news on a dreary day: Today Massachusetts Attorney General Tom Reilly announced that his office is investigating “several individuals and businesses who allegedly target homeowners by offering to ‘rescue’ them from foreclosures, but instead trick them into deeding over their property.” He urges homeowners who think they have been victims of a foreclosure “rescue” scam to call the Consumer Hotline at 617.727.8400.

His office also issued a consumer advisory warning homeowners not to fall victim to mortgage foreclosure scams.

"Families in Massachusetts are being squeezed on all sides - from soaring gas prices to utility and health care costs." AG Reilly said. "Now as foreclosure rates are going up, we're hearing complaints about companies taking advantage of people who are trying to save their homes. Consumers need to be careful. I urge homeowners facing foreclosure to talk with licensed professionals, including lawyers and real estate professionals, before entering into any agreement or arrangement involving their home."

Posted by Bill McLeod at 5:46 PM | Permalink | Comments (0) | TrackBacks (0)

Here's another interesting report of a mortgage scam. This one is out of Salt Lake City: KUTV.

And more detailed report on what's going on in Illinois.

Finally, here's something that I fear we'll be seeing more of in the months and years ahead. In a Kansas City federal court, a former loan officer and a former real estate appraiser were sentenced for their part in a mortgage fraud scheme. They would help consumers get inflated mortgages by using inflated appraisals. Both got five years probation and both have to pay more than $1 million in restitution. The loan officer worked for Ameriquest Mortgage, a company which has agreed to pay the Commonwealth of Massachusetts millons in restitution for similar practices which ultimately left homeowners with debt they could not handle.

Posted by Bill McLeod at 5:37 PM | Permalink | Comments (0) | TrackBacks (0)

An old client called today to tell me about a problem he was having with a bill collector. It seems he fell behind on their credit card payments, and the credit card company sent the account out to two different collection companies who took turns calling (or harassing) the client.

While on the phone with one of the collection companies, the client offered to pay some money towards the account and asked for an address to where the check should be sent. The response was “we’ll settle it today for ‘x’ amount.”

The client jumped at the chance to get these boneheads off his back and off his phone.

“I’ll accept," he gleefully responsed. " Where do I send my check?”

The response:

“We don’t want your check. We want your bank account information and we’ll do a transfer.”

Smell a rat? I did and you should.

Continue reading "Don't Give Collectors Your Account Information" »

Posted by Bill McLeod at 7:41 PM | Permalink | Comments (0) | TrackBacks (0)

Another person wrote to me letting me know about the missive they received in their mailbox:

"Within my hand, this mail-merge Post Card I've recently received from Kensington Assistance Agency; 1357 Broadway, Suite 260; New York, NY 10018;..... I must express to you my gratitude for your efforts. Though Kensington offers me a $5,000 to $50,000 grant to pursue my further Education, Degrees, Manuscripts, etc., the $299.97 fee one must question. The card indicates a "free" application, etc. Fraud one may clearly sense. Thank you."

Funny, I haven't heard from anyone at Kensington Assistance Agency yet.

Posted by Bill McLeod at 7:30 PM | Permalink | Comments (20) | TrackBacks (0)

A few days ago, I warned readers about Kensington Assistance Agency. The RIP-OFF ALERT! followed a call I received from someone who was facing foreclosure of their home, and was fairly convinced they were awaiting approval for a government grant that would get them caught up on their bills. Kensington sold the grant scheme to the homeowner for almost $300.

Today, I receive an email from a reader from another state:

"Thank you for the alert about Kensington Assistance Agency. I received one of their post cards telling me that I had been identified as a possible qualifier for a government grant. When I called the number, they ask me many questions among those was the name of my bank, account number and social security number. I did not give them the information and ask why they needed this data. The lady became argumentative and I hung up. Thanks for alerting the public about these scam artists."

I am thrilled the reader was able to avoid the scam. But despite the warnings here, and in other places on the web, Kensington is still slithering out there preying on folks. If you get one of these postcards, please contact the consumer protection division of your state attorney general’s office to file a complaint.

Posted by Bill McLeod at 2:19 PM | Permalink | Comments (32) | TrackBacks (0)

Today I received a call from someone facing foreclosure. They were not employed, had difficulty finding work, but told me that they had “applied for a grant” and if they received the “grant”, they would be able to cover their mortgage deficiency.

This heightened my interest since I do not know about any grants available – and that’s information I can pass on to other people in the same situation. So I asked about it.

The caller told me “I paid them $299.97 and they will get back to me.” I was then told that the payment was not in the form of a check, but bank account information (routing and account number) as well as the social security number were given over the phone. The red flags went up in my head.

While I had the caller on the phone, I did an internet search. The search results were not positive.

Continue reading "RIP-OFF ALERT! Kensington Assistance Agency" »

Posted by Bill McLeod at 12:43 PM | Permalink | Comments (32) | TrackBacks (0)

There’s an outfit called “We The People” that touts itself as an cost effective alternative to hiring attorneys to assist consumers with that they claim is merely “document preparation.” According to a franchise website, “[f]or the last 10 years, We The People has invited entrepreneurs to reach out to their communities by offering an efficient, affordable, and convenient alternative to the high cost of attorneys’ legal services.” Unfortunately, WTP has developed quite the reputation among consumer bankruptcy attorneys for providing substandard and grossly incompetent bankruptcy services to consumers, and in some cases, engaging in the unlawful practice of law. Thus, you can imagine my shock during a recent stroll through Boston’s City Hall Plaza when I noticed that WTP has set up shop here.

Bankruptcy courts from around the country have caught onto WTP’s practices when it provides bankruptcy services to customers. However, their customers have not been so lucky.

Continue reading "‘We The People’ Has Got Some Problems" »

Posted by Bill McLeod at 5:39 PM | Permalink | Comments (0) | TrackBacks (0)