Consumers warned of loan modification scams

SALT LAKE CITY — Daney Pryor never really saw it coming. He and his wife were living in their Riverton home when unexpected medical expenses forced them to seek a mortgage loan modification.

Unfortunately, through miscommunication, misinformation and what could be just plain incompetence by his mortgage lender, Pryor and his spouse no longer own the house they invested so much of their lives and money in.

Pryor said when he went on temporary disability following knee surgery, they decided to ask their lender at the time, Countrywide Financial, if they could do a loan modification to lower their payments. What ensued was a series of events that eventually resulted in the couple losing the one asset they had hoped to save.

"We got a lawyer … filled out the paperwork (in November 2009)," Pryor told the Deseret News. By January, the bank told them, "We're in foreclosure," even though they had continued to make the mortgage payments, he said.

"I called them, they wouldn't accept the payment," Pryor said. He explained that confusion and disaster ensued when Countrywide — which was acquired by Bank of America, Fannie Mae (the Federal National Mortgage Association) and his attorney all failed to communicate effectively, resulting in his home being sold to Fannie Mae.

While Pryor's experience would not fall under the category of fraud or a scam, it could serve as a cautionary tale for many Utahns.

In the wake of recent national news reports on foreclosure fraud, the Utah Division of Real Estate released a list of loan modification tips for Utah consumers. The agency has compiled the "Do's and Don'ts for Loan Modifications" in response to growing confusion from consumers on where they can turn for help.

"We encourage homeowners to review this list before entering into any loan modification to avoid the devastation of losing their home," said Deanna Sabey, director of the Utah Division of Real Estate. "Unfortunately, when people are really down on their luck, you get situations where the "sharks start to circle" and you get people who are looking to make a quick buck and take advantage."

Sabey said the majority of complaints her office receives are from consumers who have paid a loan modification company to provide services, but the company failed to live up to its responsibilities.