From bad to worse in mortgage crisis
When Juventino Mireles' daughter and his in-laws hit financial rough spots earlier this year, his efforts to help them put him $7,500 behind on his own mortgage payments.
In September, his northwest Houston home was posted for foreclosure.
Just as things seemed most desperate, a letter arrived in the mail from a company offering help as long as Mireles acted fast.
The company said it could get his monthly payments and interest rates lowered for a fee of about $1,400, he said.
As foreclosures continue to climb amid a sluggish economic recovery, Mireles and other homeowners, desperate and facing the loss of their homes, are getting solicitations from businesses offering services that are free elsewhere - and also are vulnerable to outright scams promising loan modifications or rescues from foreclosure.
Earlier this year, the Lawyers Committee For Civil Rights Under Law established a hot line for complaints about foreclosure assistance solicitations and has received 354 reports from Texas, about a fifth from Harris County.
The Texas Attorney General's Office has received about 80 complaints each of the last two years.
After getting the letter offering help, Mireles paid the fee, and the company did manage to get his foreclosure postponed for a month, but when Mireles called again the following month, he says he was told the company was reviewing his loan.
In October, he lost his three-bedroom home to foreclosure and now faces eviction.
"I paid them money, and all they did was get me thrown out of my house," Mireles said. "I was depending on them to help me with a modification package."
Houston-area foreclosure postings in September totaled 4,691 - the highest since October 1987.
Some banks locally and nationwide have acknowledged errors in the way they process foreclosures, and some even suspended foreclosures last month.
The turmoil and confusion make hopeless homeowners ripe targets.
"People are desperate, they think time is of the essence and a company is saying they have this track record, and people will believe it," said Sherrie Young, executive director of Credit Coalition, a local housing counseling agency.
Mireles says he lost his home for two reasons. He heeded the company's advice to stop making further loan payments even when he had enough money, and he assumed his file was under review and therefore he was not subject to foreclosure.
The company, 21st Century Mediation, later provided information to Mireles showing it didn't continue communications with his lender after mid-September.
Chris Arnold, a loss mitigation processor at 21st Century Mediation, declined to look specifically at Mireles' case. But if a foreclosure is postponed and later goes through, it usually means the homeowner failed to return the appropriate paperwork or fees to the mortgage company on time, he said.
"If we tell you to do something, you have to get it done," Arnold said. "Then everything is fine. In this case, I'm not sure what happened, but his foreclosure was postponed for a reason, so there must have been something he didn't follow through with."
Arnold acknowledges that the company's services are available elsewhere for free. If it were easy to deal with lenders, he says, mitigation companies would be out of business. But negotiating with a lender can take months, he said, and mitigation firms can help make the process less frustrating.
"We're not here just to make money off of people that don't know what they're doing," he said. "We stop hundreds of foreclosures, and we can just get it done in a timely manner."
Mireles says he never received any documents from his lender or from 21st Century Mediation.
Often homeowners in mortgage distress receive dozens of letters offering last-minute help.
The firms often sift through foreclosures posted at the courthouse and then hawk advice or intervention services.
Free help is available, however, from local counseling agencies approved by the Department of Housing and Urban Development.
Mitigation companies that charge for such services may help borrowers navigate the process of trying to save their homes.
But other operations aren't intended to work through the legitimate system at all.
Some dupe homeowners into paying them monthly mortgage checks, consumer advocates said.
Others convince homeowners to transfer title over and promise to rent the home back in a lease-buyback agreement. They then charge rents the former homeowners can't afford, and evict them.
Consumer advocates recommend homeowners in trouble check with the Better Business Bureau before handing money to a company that claims it can intervene to help.
Some businesses that offer to help with delinquent mortgages actually do the work for which they charge, although customers may not know the same service is available for free from counseling agencies. But some are outright scams. Be cautious if a business:
Guarantees to stop the foreclosure.
Instructs you not to contact your lender, lawyer, or credit or housing counselor.
Collects a fee up front.
Accepts payment only by cashier's check or wire transfer.
Tells you to lease your home so you can buy it back over time.
Tells you to make your mortgage payments directly to it, instead of your lender.
Wants you to transfer your property deed or title to it.
Offers to fill out paperwork for you.
Pressures you to sign paperwork you haven't read or don't understand.
If you think you've been a victim of foreclosure fraud, contact:
Federal Trade Commission: 1-877-382- 4357
Texas Attorney General: 1-800-6 2 1-0508
Better Business Bureau: 1-877-4 6 8-9222
Read More: Purva Patel, Houston Chronicle