Scammers Making Mortgage Woes Worse

Home, mortgage refinancing, dollar sing, graphic of house
AP / CBS
Where there are people in distress, you'll frequently find rip-off artists, and the growing number of homeowners finding themselves in danger of losing their houses to foreclosure is no exception.

The Early Show consumer correspondent Susan Koeppen reports that scammers are targeting those homeowners, promising to help save their homes but instead leaving them in the lurch, cashing in on their vulnerability.

Koeppen says the Better Business Bureau has received complaints from victims in almost every state, and with the foreclosure rate almost doubling since last year, the problem is sure to persist.

She says the companies promise to stop the foreclosure, telling homeowners to cut off contact with their lenders as they work out a deal for the homeowners.

But in reality, Koeppen explains, the so-called mortgage rescue companies do nothing, and many people are losing their homes as a result.

Koeppen met one Ohio homeowner who lost her house after turning to such a "rescue" company, and another who almost did.

In the first case, Koeppen was unable to reach anyone at Financial Protection Industries, the company the homeowner hired.

The company involved in the second instance, WJW Enterprises, was sued by Ohio Attorney General Marc Dann and found liable for thousands of dollars in damages but, he says, hasn't paid a dime so far.

WJW's owner told Koeppen he's helped thousands of homeowners, and has no intention of paying the judgment against him.

In general, the scammers are "very bad people," Dann says. "We have filed suits against six mortgage rescue companies already, and we've gotten complaints about dozens of others. … These are shady operators who often spend the money that they've received from homeowners long before the homeowner even knows they've been ripped off, so we're often trying to chase cattle long after they've left the barn."

Koeppen stresses that if someone asks you to pay a fee to help save your home, it's a scam. The key: Don't stop talking to your lender. Try to work out a deal or payment plan.

She advises that if you want to file a complaint against a company, you should contact your state's attorney general's office, or your state's Department of Consumer Protection.

To research a company's complaint record and/or file a complaint with the Better Business Bureau, go to the BBB's Web site.

The BBB offers the following help for homeowners facing mortgage foreclosure:

  • Request a free Reliability Report before paying any "rescue" company. You can also check with your state attorney general and state Real Estate Commission.
  • Beware of the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that "help" is available from someone who has your best interests in mind.
  • Talk to your lender. The first thing you should do is talk to your mortgage company about how to restructure your loan payment or refinance.
  • Never sign a contract under pressure and never sign away ownership of your property. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.
  • If you feel you have been taken advantage of by an unethical mortgage foreclosure "rescue" company, file a complaint with your BBB at www.bbb.org, where you can also get trustworthy advice and tips for troubled homeowners.