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If it sounds too good to be true... 

Experts warn that a rash of foreclosures is bringing consultants out of the woodwork��"but not all of them are as much help as they promise

Donna Scarpa was on the verge of losing her house, so she went looking for help. What she found was a $997 headache, and she’s still scrambling to stave off a foreclosure auction on Jan. 8.

When Scarpa’s house went into foreclosure, she hit the Internet in search of someone who could renegotiate her loan and save the house. She searched such websites as Craigslist.org and Zzstar.com and found someone who seemed to fit the bill.

Scarpa said a self-described foreclosure prevention consultant with a company calling itself U.S. Foreclosure Freedom met with her and her husband in August. Scarpa paid $997 up front by credit card to save the house; that was originally scheduled to be in September. But later, Scarpa said, she had trouble contacting the representative and became concerned she wasn’t getting what she paid for.

About a week before her house was to be auctioned, Scarpa took matters into her own hands after unsuccessful attempts to reach the person. She learned that she wasn’t being considered for a loan forbearance, as she said she engaged the consultant to negotiate. Instead, she was on the list for a “short sale.”

A short sale allows a person facing foreclosure to sell the house before the bank does and pay off as much of the mortgage as possible. The person still owes any remaining debt, however, and still loses the house. Scarpa said she didn’t want to lose her house.

She said when she confronted her foreclosure prevention consultant, the representative grew defensive.

Scarpa independently managed to get an extension on the foreclosure sale until Jan. 8. She’s still unnerved, however, and worries how much she’ll be able to accomplish in a month.

The representative could not be reached for comment. The phone number for U.S. Foreclosure Freedom was disconnected, and an e-mail to the company bounced back as undeliverable. Messages left with another phone number Scarpa provided for the representative weren’t returned.

The County Assessor had three former business addresses listed for the self-proclaimed consultant in the Five Cities area, but listed no current residential or business addresses. U.S. Foreclosure Freedom was not listed with the Better Business Bureau and did not have a business license on file with the County Tax Collector.

Asked why she searched for assistance online, Scarpa said she was looking for someone local.

Many local legal experts had no doubt that the current financial environment is ripe for foreclosure consultants, legitimate or not, to act.

Tom Pool, a spokesman for the California Department of Real Estate, said the loan-modification business is exploding in the current foreclosure-heavy market—and people should be leery.

By law, foreclosure consultants must be licensed with the Department of Real Estate (which had no license information for U.S. Foreclosure Freedom). Even licensed consultants need to have an approved contract with the department before they can charge up front for services. There are only about 30 companies in California that have been approved (U.S. Foreclosure Freedom is not one of them).

According to Sheriff’s Department spokesperson Rob Bryn: “Anybody who advertises a service in which you have to pay up front, that should be a warning sign to anyone that there’s a potential for abuse.”

SLO-based attorney Stephen Stern said up-front payments take away the incentive to actually help people.

“It’s sad to say, but through tragedy people try to find opportunity, and opportunity might be at the demise of the people they are supposedly helping,” Stern said.

There are safer options than going online. The U.S. Department of Housing and Urban Development offers certified counselors. The SLO County Bar Association operates a Lawyer Referral and Information Service, which lets anyone consult an attorney for 30 minutes for $30.

There aren’t, however, many documented scams in California. Attorney General Jerry Brown is working on two cases, and the office warns people facing foreclosure to beware.

“It’s always been a problem, but because of the sheer amount of foreclosures now it’s an opportunity that a lot of people are taking advantage of,” Attorney General spokesperson Dana Simas said.

The Department of Real Estate shut down another company in Rancho Cucamonga, and Pool said the department is seeing a sharp increase in the number of complaints it receives.

For now, Scarpa has taken the reins of her own finances.

“U.S. Foreclosure Freedom didn’t give me freedom from foreclosure; I did.”

At least for now.

 

Help is available

The U.S. Department of Housing and Urban Development Los Angeles regional office can be reached at (213) 894-8000.

SLO County’s Lawyer Referral and Information Service can be reached at 788-2099.


Staff Writer Colin Rigley can be reached at crigley@newtimesslo.com.

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