Burlington County Times

False Hope

Burlington County Times — Saturday, April 11, 2009

By: MELISSA HAYES
Burlington County Times

If it sounds too good to be true, it probably is.

That's the message county and state officials are trying to impress on homeowners facing foreclosure who need help.

The county's Office of Consumer Affairs has received several complaints about mortgage fraud recently, and the state Attorney General's Office filed three mortgage fraud lawsuits last month.

Consumer Affairs Director Renee Borstad said many complaints involve lease-purchase agreements, in which the homeowner sells his home to a company that is supposed to lease it back to him, while the homeowner works to improve his credit score and secure a new mortgage.

Borstad said in many cases the homeowner's credit does not improve, as the company promised, and the resident cannot qualify for a mortgage to buy back the home.

She said many of these companies, which are advertising and sending out postcards, are for-profit and do not really offer the help they claim to.

State Attorney General Anne Milgram last month announced the filing of three lawsuits aimed at attacking mortgage fraud.

"In one way or another, each of the defendants in these complaints is charged with making money by selling false hope to trusting people during uncertain economic times," Milgram said.

In some cases the fraud has turned into a name game.

The state filed a complaint against Hope Now Financial, a Cherry Hill for-profit company, for allegedly suggesting it is affiliated with the nonprofit Hope Now Alliance. Milgram said the two are not connected.

Hope Now Alliance is an organization of counselors, investors and other mortgage market participants that works to keep people in their homes.

The state's lawsuit accuses Hope Now Financial of offering similar help, but charging significant fees for loan modifications without rendering services.

Milgram called on the court to shut down a Web site, www.hopenowmod.com, operated by Hope Now Financial. While the site says it is "temporarily under construction," it still offers a phone number that visitors can call.

The state also filed a lawsuit against New Hope Modifications in Bellmawr, also for allegedly claiming it is affiliated with the nonprofit Hope Now Alliance, which it is not. New Hope Modifications also is accused of selling loan modification services that were not provided.

"This kind of predatory activity is reprehensible, especially in this economic climate, and will not be tolerated," said Steven M. Goldman, commissioner of the state Department of Banking and Insurance.

Struggling homeowners were led to believe these companies would help them, but instead the homeowners were exploited.

Any individual or financial services organization that attempts to defraud consumers will be subjected to the maximum penalty the law allows."

The Department of Banking and Insurance has posted information on its Web site, www.state.nj.us/dobi, about mortgage loan modification scams after receiving several complaints.

The site states that only the lender, the owner of the loan or someone licensed by the department as a debt adjuster has the ability to renegotiate the terms of a mortgage.

Despite the fraud that exists, there is legitimate help out there.

Borstad is working to develop a program that would bring together state agencies and credit counselors to help residents.

"I want everybody involved and sitting down and thinking about this and coming to one big program. And if it works, take it on the road," she said.

Borstad said many residents do not realize help is out there.

The state has allocated $40 million for foreclosure assistance programs.

More than 700 attorneys have volunteered to serve as mediators to work neutrally with lenders and homeowners as part of a state-supported mortgage foreclosure mediation program. The program is a joint effort involving various state agencies, including the Judiciary, the Attorney General's Office, the Public Advocate and Legal Services of New Jersey.

Residents can call the Legal Services of New Jersey hot line at 888-989-5277 from 8 a.m. to 6 p.m. Monday through Friday or visit www.njforeclosuremediation.org for assistance.

Freeholder Chris Brown, liaison to the court system and owner of the RE/MAX Connection real estate agency in Evesham, held a "train the trainer" foreclosure seminar last week.

The program is a joint effort between the state Department of Banking and Insurance and New Jersey Citizen Action to educate municipal leaders on different foreclosure-related issues. It also highlights the state's mediation program.

Nearly 75 municipal and county officials as well as members of the state police and real estate industry attended the event.

"The state has a number of programs designed to help homeowners avoid foreclosure," Brown said. "It is essential for us all to understand these topics so we can effectively provide assistance to the families in our communities that need help."

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