Foreclosure Frauds and Scams

Iowa Foreclosure News and Articles

Wednesday, September 12, 2007

Iowa Foreclosure Hotline Intended to Help Borrowers & Lenders

Attorney General Tom Miller unveiled a project Tuesday aimed at avoiding a flood of subprime mortgage foreclosures in Iowa.  The pilot project will work to help borrowers and lenders modify loan terms so that borrowers can make payments – and keep their homes – and lenders can do much better financially than if they foreclosed on a mortgage.

“We are especially motivated to help borrowers because there has been a lot of misconduct by some in the subprime industry,” he said.  “Many borrowers got into problem loans because of some type of fraud or deception.  And most subprime loans were refinancing loans to existing homeowners.  Now, people who owned their homes for years are losing them because someone put them into a bad loan.”

Miller said the Mortgage Foreclosure Hotline Project also is needed because many consumers may not even know who to talk to about their loans.  “In many cases, the party that originated the loan is long gone.  Most loans go to other companies and ultimately to investors who buy big batches of loans and leave the ‘servicing’ up to yet other companies,” he said.

“Many borrowers are in a jam now who got into loans because of misconduct and fraud by people who no longer own the loans or aren’t even in business.  We will do all we can to prevent people from losing their homes to fraud,” he said.

Miller urged Iowans facing a mortgage foreclosure to call 877-622-4866 (toll-free) to reach the Iowa Mediation Service.  Iowa Mediation Service will take information from borrowers and then explore if a loan modification might work for both the borrower and lender. “We are convinced it makes sense for everyone to try,” Miller said.  “It won’t work in every case, but when it works, it’s a win for all.  Payments continue to lenders.  Borrowers remain in their homes.  Neighborhoods stay much stronger.  We all benefit.”

Miller said Iowa’s subprime foreclosure rate is over 8.6% – fourth in the nation.  “The foreclosure crisis will only get worse before it gets better,” he said, especially since millions of ‘hybrid ARMs,’ or adjustable-rate mortgages, will adjust upward this year and next.  “Borrowers suffer ‘payment shock’ when their monthly payments shoot up hundreds of dollars and just keep climbing.  They can’t make the payments and they face foreclosure,” Miller said.

Mike Thompson, Director of Iowa Mediation Service, and Miller urged Iowans to call the toll-free Iowa Foreclosure Hotline—877-622-4866—if they are in default or foreclosure, or if they think they can’t afford new higher payments when an adjustable rate moves up.

“The earlier people call, the better,” Miller said.  “Be prepared to gather and provide your full financial information.  Don’t ignore the problem.” Miller said statistics show that about 50% of people foreclosed upon never contact their lender.  “We hope people feel more comfortable contacting a third party, the Mediation Service, to see if anything can be done.  The Mediation Service will definitely work with borrowers if it looks like there’s a way to avoid foreclosure that works for everyone.”

During the Farm Crisis of the 1980s, Miller said, thousands of farm foreclosures were avoided thanks to mediation.  Iowa Mediation Service conducted hundreds of successful mediations during the Farm Crisis.  “That experience sparked the idea for this project,” he said.  “The bottom line is that everyone benefits when they avoid foreclosure.”

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