Eylonda and Tyrone Wynn of Dallas thought their prayers had been answered when two young women from Resolutions Foreclosure & Home Mortgages knocked on the door in December 2005.
"It was like â€˜Yes, we can save our house. We can start over again,'" said Eylonda Wynn, a 37-year-old mother of three.
Rising medical bills had put them behind on the mortgage payments for their blue-gray three-bedroom house on a quiet street in Cedar Hill, Texas, a Dallas suburb. Their mortgage lender, Countrywide Financial Corp., was threatening to foreclose.
The Wynns paid Resolutions $950 to negotiate a repayment plan and in January 2006, Resolutions told the Wynns the lender had agreed.
But a month later, after they still hadn't received any paperwork, they found out their house was to be auctioned that day and their file at Resolutions had been closed. They were forced out of the house in March, four years after buying it.
"They were there to help us out of foreclosure, but we lost the first house we bought instead," Wynn said.
A Resolutions official blames the Wynns for not following through on their efforts. But the couple's experience highlights one of the risks for homeowners who find themselves desperately trying to avoid foreclosure: You may simply wind up losing more money.
As the number of foreclosures rises around the country, the number of companies offering help is increasing, too. Many are negotiating terms the homeowner could fairly easily obtain on their own, while others are doing even less and simply exploiting vulnerable homeowners.
Experts recommend that homeowners screen offers carefully, and take the following precautions:
â€¢ Don't pay upfront fees to any person or organization promising help.
â€¢ Don't sign anything without having an independent lawyer review it.
â€¢ Seek out accredited financial counselors, using lists such as those kept by the Department of Housing and Urban Development. Its list is at www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.
While no one tracks the number of foreclosure aid providers, real estate professionals and consumer advocates nationwide say questionable practices are rising, especially in areas such as southern California, Las Vegas and southeast Florida where a housing boom was fed by a sharp increase in mortgages to borrowers with riskier credit.
Terry Shattuck, a 20-year real estate veteran in Colorado Springs, Colo., said he helped one client avoid many "wild rescue offers" in a pre-foreclosure sale. He posts warnings on Craigslist.
"Every time I think I've seen the latest scam, another one comes along," said Shattuck. "Every shyster calls these people and says â€˜I'll bail you out. All you have to do is sign the deed of the house over to me.'"
Finding homeowners in trouble has become easier as Web sites dedicated to listing default and foreclosure information proliferate.
So-called foreclosure rescuers then mail, call or visit homeowners.
"These guys are suggesting they have the ability to protect the homeowners when it reality they're not doing anything," said Al Ripley, a consumer advocate and attorney for The NC Justice Center in Raleigh, N.C. "They take advantage of people in desperate circumstances." Chris Wages, the operations director of Home Management Group in Dallas - the name adopted by Resolutions after it bought a title and brokerage company last year - said the company negotiated a payment plan with Countrywide and told the Wynns to expect a certified packet in the mail from the lender that spells out the terms. Wages, who only has notes in the file confirming this but nothing in writing from Countrywide, said the case file was considered closed at that point. "We're very direct and upfront with our clients, but these things can turn sour pretty quickly," he said. "More than likely, they didn't pay the lender's attorney's fees and lost their house." Wynn said she never received the package. A Countrywide spokesman said the company doesn't comment on specific cases. Wages said his company successfully negotiates repayment plans for about 95 percent of its clients, which total between 15 to 20 a month. If the company doesn't hold up its end of the contract, it will give the client a full refund of their fee. Wages said he doesn't have specific documentation for these claims. The Better Business Bureau of Dallas said five complaints were filed by individuals against Resolutions between October 2005 and July 2006 that sound similar to the Wynns' story. None of the complaints have been answered by the company, and the BBB considers the company's record unsatisfactory, according to bureau spokeswoman Jeannette Kopko. Wages said that three of the complaints were filed by a competitor of the company's, but wouldn't provide more details. One of the claims has been resolved with a partial refund, according to Wages, and the last one, the Wynns, remains unresolved. Kopko has no record of the refund, but said it's possible that neither Resolutions nor the person who filed the complaint informed the bureau of the refund. Wages said the company is moving out of the foreclosure negotiation business "because of calls like this," and now is focusing on buying properties in foreclosure from homeowners. In some cases, the company buys and resells the house, while in other cases, it will rent it back to the homeowners who can buy it after they repair their credit, often referred to as a sale leaseback. These kind of transactions also can be problematic, NC Justice Center's Ripley says. Sometimes, the investor only takes over the title of the house and the homeowner is left holding a defaulted mortgage. In the so-called sale-leaseback transaction, the monthly rent can be too high for the homeowners to pay or there are too many requirements to repurchase the home. Home buyers should be careful and consult a lawyer, Ripley said: "It's worth spending $400 on an attorney to look over documents, because it's your home we're talking about here." Albany, N.Y.-based Rivertown Financial engages in sale-leaseback transactions in New York, New Jersey and Pennsylvania. Its chief executive said the actions of some have given a bad name to the whole business. "There's nothing inherently sinister about sale leaseback transactions. Businesses do it all the time," said Geoffrey Goldman. "But there are a lot of opportunistic, unscrupulous people out there taking advantage of people. We try very hard not to get lumped into that category." Lauren Saunders, the managing attorney for the Washington, D.C. office of the National Consumer Law Center, said her group is drafting proposed guidelines for regulations on foreclosure rescue operations. A dozen states - California, Colorado, Georgia, Illinois, Maryland, Michigan, Minnesota, Missouri, New York, Rhode Island, Washington and Florida - already have adopted laws designed to help protect homeowners, Saunders said, while several - including New Hampshire, New Jersey and Nebraska - are considering it. All this comes too late for Wynn and her family, who live only a few blocks away in a rented home that is larger but lacks many of the touches of her former house. "We have to pass that house every day and someone else is living in it," she said. AP-CS-04-17-07 1739EDT