Thomas F. Miles, Attorney and Counselor at Law
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Mortgage debt reorganization offer a scam

California homeowners who are going through a period of financial difficulty are often extremely fearful of losing their home to foreclosure. Many will try a number of solutions to ease their debt scenario, up to and including filing for personal bankruptcy. Before they reach that point, however, some consumers will seek a method of debt reorganization. One such program has been recently unveiled as a fraud, and can serve as an important warning to anyone trying to avoid foreclosure.

The scam begins with individuals accessing public records concerning the early stages of foreclosure, homeowners who financed through Wells Fargo Bank were identified, then mailed fraudulent loan reorganization packets. The mailings were very well-designed, and included all of the components of a real loan restructuring packet. Homeowners received an offer letter, loan application, hardship affidavit and even information about the Making Home Affordable program. At least one form even had an official-looking seal of the U.S. Treasury.

In reality, however, there was no loan restructuring program in existence. Scammers simply collected the completed applications, often including thousands of dollars in fees. Even worse, the applications also included a wealth of personal information, including everything needed to complete identity theft. The state that was targeted by the scammers has created a special task force to investigate the matter, and Wells Fargo Bank has offered a year of free identity-theft protection services to affected consumers.

For those in California who are struggling to retain their home, this story sends a sobering message. Today's technology allows scam artists to produce documents that appear to be legitimate, which can lead to this type of fraud. When searching for debt reorganization options, it is imperative to remain vigilant about the possibility of falling prey to one of these operations.

Source: Herald-Tribune, Mortgage modification scam shows growing sophistication, Josh Salman, Feb. 13, 2014

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