When scary letters start piling up
A family that’s more than two months behind on a mortgage will often come home to a mailbox stuffed with brightly colored envelopes and postcards from companies promising to help them save their homes.
One such postcard that Steve and Dawn Reyes received after Steve lost his job as a carpenter was from Mortgage Assistance Solutions, a Florida-based company that’s known by its customers as Fresh Start.
“YOU WILL LOSE YOUR HOUSE IF YOU DON’T CALL US NOW!!!” the postcard said.
When Dawn called, the company promised to refund its $1,200 upfront fee if it couldn’t help them. A month after they signed up, the Reyeses received a summons stating that their house was scheduled for auction on Dec. 12 of last year.
“I called the guy at Fresh Start, and I’m frantic,” recalls Dawn, 27, a stay-at-home mom and first-time homeowner in Machesney Park, Ill. “I said, ‘Look, I got this summons to go to court; I thought you were talking to the bank.’ “
The reply, she says, was: “Yeah, we’re talking with them. I’ll call them and put a stop to them. We get a lot of calls like this. It’s just a scare tactic; nothing’s going to happen.”
The Reyeses had signed a document in November of 2006 giving Mortgage Assistance Solutions permission to negotiate with the family’s lender. But the Illinois Attorney General’s office, which filed a lawsuit against Mortgage Assistance Solutions two months ago, told Dawn that their lender didn’t receive that document by fax until Dec. 14 — two days after Dawn received the summons, and called them.
Angry, Dawn demanded her family’s money back. Mortgage Assistance Solutions sent her $700 and said it was entitled to the remaining $500 because of the time it spent on her case.
Yet soon after Dawn canceled the services, she says, she received another green-and-white envelope in the mail from Fresh Start. It read: “FORECLOSURE COMPLAINT NOTICE. Your House Is Scheduled To Be Sold At Auction. National Bank.”
Michael Stoller, a Los Angeles attorney and owner of Mortgage Assistance Solutions, says, the Reyeses were “denied a repayment plan because of insufficient income and lack of supporting documentation.” The family wasn’t entitled to a full refund, Stoller explains, because the company charges $150 an hour for time spent negotiating with the lender.
When USA TODAY told Stoller that a non-profit counselor was able to help the Reyeses obtain a new fixed-rate loan with a much lower interest rate in June, he suggested that lenders are more willing to modify delinquent loans to help an owner stay in a home than they were before.
Mortgage Assistance Solutions, Stoller says, has handled more than 6,000 cases this year and refunded $1.1 million this year to homeowners it couldn’t help. “That’s not a company that takes money from customers and runs away,” he says. “Our goal was always to help homeowners.”
Still, Stoller says his company is winding down its operations and will stop doing business by early next year, because of increased regulation and competition.