Philadelphia to launch scam-alert program on mortgage modifications

It's a warning you've heard before, but it bears repeating:

Beware of scammers offering to save you from foreclosure.

"They are trolling for homeowners constantly, so they are getting people at a time when they are desperate," said John Dodds, director of the Philadelphia Unemployment Project.

To stem the tide, on Tuesday the city is launching a "loan-modification scam alert" program, designed to help homeowners identify the signs of rescue scams, obtain foreclosure-prevention help from reliable groups, and report fraudulent activity to authorities.

People who believe they are being victimized can call the same SaveYourHomePhilly hotline set up for the city's mandatory mortgage foreclosure diversion program: 215-334-4663.

Edward Harper, 73, retired from the Philadelphia Housing Authority, missed a couple of $500-a-month mortgage payments in 2007 because his daughter, who lives with him, needed the money.

Facing foreclosure, he searched on the Internet for help, filled out applications, and was contacted by Fresh Start Financial Services in Mount Laurel.

"The lady from Fresh Start told me she would give me a 'buy-back mortgage' " and said that he would not have to pay his mortgage for a year, he recounted.

After that, he would be given a mortgage in line with his income, a combination of Social Security and a pension.

He signed the papers. Seven months later, he was told that his payments would be $1,200, and he was still receiving what he said were "scary" letters from his original lender.

Harper contacted Community Legal Services. His lawyer, Dan Urevick-Ackelsberg, discovered that the house had been purchased by a "straw buyer" who was related to a broker at Fresh Start.

Urevick-Ackelsberg said that among the sheaf of papers that Harper had signed was a quitclaim deed that handed legal ownership of the house to Fresh Start Financial.

Harper and others similarly cheated "were not represented at the closing," the lawyer said.

The straw buyer's lender was Sovereign Bank, he said. The bank has foreclosed on the straw buyer, and has a sheriff's sale pending.

Urevick-Ackelsberg will file a civil suit against Fresh Start on Harper's behalf. He has asked Sovereign to delay the sale until it sees the lawsuit.

The bank hadn't notified him of its decision as of Monday afternoon. Harper remains in his home.

Although New Jersey has actively pursued a number of bogus foreclosure-rescue firms, Jeff Lamb of the Division of Consumer Affairs said Fresh Start was not among them.

Efforts to contact Fresh Start were unsuccessful.

Many scammed homeowners suffer in silence, ashamed to have fallen into the trap.

"Usually, after the scam, they tend not to come to us," said Patricia Hasson, president of Consumer Credit Counseling Service of Delaware Valley in Philadelphia.

One who did paid $2,500 up front for services that were never provided, said the agency's spokeswoman, Maureen McKeown.

Dodds said one of his agency's clients paid $7,000 to a firm that "went out of business and did nothing for her."

One reason troubled borrowers turn to scammers is that legitimate modification programs aren't working well.

About 436,000 borrowers of the 1.24 million who applied since March 2009 - more than 35 percent - have not been able to modify their loans. Most contend that lenders misplace the reams of paperwork needed for the loan changes.

"It is absolutely true that the government programs need to be more effective, particularly for the unemployed, to get people help, rather than leave them ripe to be exploited," Dodds said.