I have just read an article about a court action filed by the Arizona Attorney General Tom Horne in the Pima County Superior Court against Mortgage Capital USA, Inc and its Chief Executive Officer (CEO), Gustavo Anaya. According to the complaint the Company engaged in a loan modification scam targeting to defraud consumers. The complaint alleges Mortgage Capital USA, Inc and Mr. Gustavo Anaya use deceptive means to lure distressed homeowners to pay for loan modification services without providing the contracted services.
Of course the Company and Mr. Anaya will have the opportunity to present their defense. I am not familiar with this particular company or its practices. However I am familiar with other companies that provide similar services.
I met my fair share of homeowners that paid for loan modification services and still end up losing their homes to foreclosure. This happens more often that you might think.
If you are facing foreclosure or are thinking about hiring a company to help you negotiate a loan modification I suggest you consider the following topics:
- In Arizona it is illegal to charge up-front fees for loan modification services. Companies that charge those fees are in violation of Arizona’s consumer protection laws. Those up-front fees are illegal because in most cases consumers never get the services or goods they paid for.
- Before hiring a Company or person to help you with loan modification, check if they are licensed in Arizona to provide such services. Avoid hiring someone that is not properly licensed.
- If English is not your primary language you will need to be extra carefull when signing documents. I have seen companies say one thing in Spanish and write something else in English. Make sure you feel comfortable and understand the terms written down. Take your time to review the documents.
- I have seen companies mislead homeowners by stating they are a law firm and that lawyers will work on the case. In my experience, most loan modification companies are not law firms and the files are not usually handled by lawyers. In most cases, the company will have a regular employee fill the forms and submit the paperwork on your behalf.
- Most loan modification companies are not prepared to provide advice to homeowners seeking loan modification. Not all homeowners are good candidates for loan modification. However, most loan modification companies will still go through the process with any homeowner that is willing to pay their fees. I strongly suggest you seek professional advice before signing a loan modification contract.
- In many “successful” loan modifications, homeowners end up reducing their mortgage payments for a period of time. However, in most cases the bank will add the late payments, fees and the amounts discounted to the mortgage balance. As a result the homeowner will still owe more than the house is worth. I have seen cases where the amount owned increased by more than 20% after the loan modification. Before accepting the terms of the modification, make sure you understand them and their impact in the future. Sometimes getting a short term relief may not be the best decision for your family.
I hope this helps. Please do not hesitate to contact me at (623) 418-5700 if you would like to discuss your specific situation. If I can’t help you, I will do my best to introduce you to someone that can.