VALLEJO (CBS 5) – Three years after a law made it illegal to charge a homeowner an up-front fee for help with a loan modification, companies are still trying to get homeowners to pay thousands of dollars for services they can get for free.

Mary Azamar of Vallejo found out firsthand. Last year, Azamar got a postcard from a San Diego company called “My Homeowners Advocate.”

Azamar said at first, it sounded like a reasonable way to get a loan modification. “They were going to work on it with us,” she said. But first, the company wanted $3,575. “One guy said to us ‘Just send us the money. It’s going to get done,’” she recalled.

So, Azamar sent the money, but the loan modification never happened. Although at some point, a second company came on the scene, HOALM, Home Owner Advocate Loss Mitigation. “After they got the money, we never really heard from them,” Azamar said. Back in August, the HOALM website stopped working, and calls to the company go straight to a recording that says the number has been “disabled.”

There are scores of complaints against both companies on line. The Better Business Bureau gives My Homeowners Advocate an F rating.

Solano County Assistant District Attorney Laura Undlin says charging an up-front fee for help with a loan modification has been illegal since 2009, but she says some companies are getting around the rule by telling homeowners they’ll do some work on their behalf, before collecting a fee. “They can’t guarantee a successful loan modification,” Undlin said, “but they’re going to say they’re going to contact the bank. It’s going to have enough grey area, where they can say they complied with it.”

Homeowner rights advocates advise homeowners seeking a loan modification to contact their lenders directly, or a non-profit HUD-approved housing counseling agency, which will not charge a fee for its services.


(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)



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