Prevent Loan Scams
Real Stories

Nellie H. from Chandler, Arizona


Nellie bought her home 12 years ago. Her interest rate was good, and her job at a profitable semiconductor business placed her in a good financial position to make several improvements to the house. When the economy took a turn for the worse in 2008, Nellie's employer instituted a series of cutbacks and Nellie lost over $7,000 in annual income.

In January 2009, well before Nellie fell behind on her mortgage payments, she contacted her lender to see about getting her mortgage payments reduced. Unfortunately, her lender said her monthly income was too low to qualify for a modification.  By May, 2009, Nellie fell behind on her mortgage, and in September she received a foreclosure notice. Later that month, Nellie saw a television ad for a loan modification company, called the number, and was told seasoned attorneys could help her obtain a favorable loan modification.  However, she would have to pay a $1,300 advance fee - refundable if no modification was made to her loan - before any services would be provided.

Without signing a contract or receiving any documentation, Nellie decided to pay the fee in installments. The company took an initial payment of $300 in September, and then a second payment of $700 on October 2. While the second charge was pending on her account, Nellie attended a weekend foreclosure event where she learned non-profits could provide her with assistance securing a loan modification for free.

After the event, Nellie decided to work with a non-profit counseling agency, contacted the for-profit company, requested a refund and faxed a letter as instructed.  Her account was still debited $700.  When Nellie called to complain she was told all refunds must be approved by the company's president. On October 14, she received a letter informing her  that  at least  some of the fees charged were used to cover administrative costs and non-refundable, contradicting the initial money-back guarantee, and that any refund would not be sent until 15 days after they received her response. Nellie quickly mailed a response on October 16.

The company did not contact her again until November 17-much later than the promised 15 days. In the letter, Nellie was told to complete an enclosed release form, notarize and return it.  The release form stated she could expect $500 within 15 days if she was granted a refund.   After returning the notarized form, Nellie called several days later to follow up, and was told another employee was working on getting the refund processed. After making several calls to the company to no avail, Nellie gave up trying to get a refund in early January, 2010.

To date, Nellie has not received her refund and patiently waits to hear whether or not the non-profit counselors she is working with can work out a modification that will keep her in her home.  If she cannot get her payments reduced, Nellie will be left with three options: 1) catching up on her mortgage, which she cannot afford 2) proceed with a foreclosure, or 3) sell the house in a short sale. Nellie believes foreclosure is imminent, and has already begun searching for a place to rent.