WASHINGTON -- The foreclosure sharks are circling the San Joaquin Valley.
Homeowners beware. Just ask Fresno resident Patricia Ireland.
A temporarily laid-off Internal Revenue Service employee, Ireland was scrambling to meet her mortgage payments recently. Out of the blue, a company called to offer help. For a $2,500 fee, Ireland was told, the company and its Irvine-based lawyers would renegotiate the mortgage. Desperate, Ireland paid a $500 down payment.
Then she found the fine print.
"When I read the papers they sent me, they said that until they got the full $2,500, they wouldn't talk to my mortgage company," Ireland said.
Instead, Ireland went to the Community Housing Council of Fresno. The non-profit group provided for free the same mortgage renegotiation assistance for which the for-profit company charged money. Ireland has now tried for nearly a month to retrieve her $500 down payment.
"It's been heck trying to get the money back," Ireland said last week.
Ireland's experiences are far from unique.
With Stockton, Modesto, Merced and Fresno all ranking among the nation's leading cities for foreclosures, the market invites commercial exploitation. Hundreds if not thousands of San Joaquin Valley homeowners are being besieged by letters, phone calls and even door-to-door visits that purportedly offer escape from financial harm.
Barbara Galvan, for instance, resides in Southeast Fresno and said she has never missed a mortgage payment. Nonetheless, as her adjustable rate keeps rising, she's been getting the hard sell from purported rescuers.
"I'm getting lots of calls," Galvan said. "They want me to pay $3,000 or $4,000 up front. I tell them, where will I get $3,000 if I can't pay my mortgage? They say, I could put it on my credit card."
Salida resident Roberta Abina, who works in the Bay Area, was similarly contacted out of the blue by a foreclosure rescue company. She said she was convinced to tap her 401(k) retirement fund for $2,495 to pay for the assistance.
"They did absolutely nothing at all," Abina said. "Then, I had to fight with them to get a (partial) refund of $1,200. If I hadn't fought with them, I wouldn't have gotten some of my money back."
Mortgage rescue offers can be legitimate, so long as the promised work is actually done. In some cases, companies may be performing a valid service; some companies offer testimonials to their good work on their Web sites.
Still, the risk of abuse is high, and the proliferation of for-profit foreclosure rescue companies worries some. The non-profit Community Housing Council of Fresno warns against predatory for-profit companies.
"They'll take the money, and that's it," volunteer counselor Sonia Neal said of some companies. "They'll disappear."
At the least, foreclosure rescue companies may be charging excessive fees. Any homeowner can attempt their own mortgage negotiation at no charge or with the assistance of non-profit counselors.
Other foreclosure rescue companies will ask homeowners to transfer title to the home. Some will ask that they receive mortgage payments instead of the lender. Some will direct the homeowner to ignore letters from the lender. All should raise red flags.
"The types of mortgage foreclosure rescue fraud are as varied as the imaginations of the perpetrators," Peggy Twohig, an associate director with the Federal Trade Commission, advised a Senate committee in February.
The California attorney general's office notes that "it is unlawful for foreclosure consultants to collect money before ... they actually perform all of the services described in the contract, such as negotiating new monthly payments or a new mortgage loan."
Down payments are permitted, but Neal said complete fees should not be paid until the work is done.
The FBI already has a Sacramento-based mortgage fraud task force in place, one of about 40 nationwide, and the Federal Trade Commission has a number of ongoing, non-public investigations of foreclosure rescue scams underway nationwide. Potential targets abound.
In early November, for instance, California law enforcement authorities charged members of an alleged fraud ring operating as First Gov and Foreclosure Prevention Services. The companies demanded up-front payments of between $1,500 and $5,000.
Money was collected, but California Attorney General Jerry Brown said the promised work was not done.
Three of the former First Gov and Foreclosure Prevention Services employees identified in the arrest warrant, Rosa Maria Conrado, Alejandrina E. Maldonado and Saul Ismael Amador, acknowledged conducting foreclosure rescue work in Merced, Tulare and San Joaquin counties. Some were paid several hundred dollars for every client brought in.
"(Conrado) said she suspected something was wrong with the business but she did not have any proof so she continued to work for (it)," Conrado told Merced County investigators, according to the 26-page arrest warrant. "She learned from clients that he was not helping them with their mortgage loans, and she also learned that the business location did not exist."
Conrado told investigators she operated out of Los Banos for a time, using the false name Ana Gonzalez. She carried a stack of business cards with that name, shipped in from Mexico. She told people she would help them.
"I've had lots of people come to me with these scams," said the Rev. Bill Knezovich, minister at Our Savior's Lutheran Church in Fresno. "There are so many that will take you for a ride."
Homeowners facing foreclosure can contact the Homeownership Preservation Foundation, which provides assistance. The Foundation can be called at 1-800-995-HOPE, or contacted on the Web at www.995hope.org.
Housing counselors approved by the Department of Housing and Urban Development may be able to provide free assistance. Contact HUD at 1-800-569-4287.
The Community Housing Council of Fresno provides free assistance. The Council can be contacted at 559-221-6919 or on the Web at http://www.chcfresno.org/