Vet Beats Mortgage Mod Scam

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In celebration of Veterans Day, HousingWatch is featuring stories about veterans and active military personnel and their real estateexperiences.

When Hank Neigel, a 66-year-old disabled veteran, realized in February 2009 that he and his wife, Carol, would no longer be able to afford the monthly $1,300 mortgage payments on their three-bedroom, two-bath home in Hewitt, Texas, just south of Waco, he sought loan modification help from a company he found on the Internet.

Boy, was that a mistake.

The Mesa, Ariz..-based loan modification firm advertised a 100 percent performance-based, money-back guarantee. In exchange for a fee of $2,250, the company promised to handle all the paperwork and presentation to the lender of the modification of Neigel's $97,000 conventional loan.
"I did the best I could to check up on them before I retained their services to help us modify the terms of our mortgage," he says. "However, I was stressed beyond belief."

His wife, who is disabled, had just lost her job at DHL, drastically cutting the money that was coming into the home they purchased in 2007, complete with swimming pool. Neigel, a former U.S. Marine who had served a little over 10 years from 1961 to 1972, is on disability and VA benefits. "I am a diabetic, and we got hit with Agent Orange," he says. "I got back injuries, I have had back surgery, knee surgery, all sorts of things."

Initially confident that the loan modification firm could help them, Neigel borrowed money from friends to pay the fee via a cashier's check: "A month goes by, three months, I don't hear anything. So I called them, and I said 'What's going on?' They said, 'We're working on it.'"

Meanwhile, the mortgage company started to give Neigel a hard time for missed payments. "You need to do something now," Neigel says he told the loan mod company. They said OK, and then hung up.

Some days later, Neigel was no longer confident about the company and wanted to end
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the deal under their 100 percent money-back guarantee. So he called the agent he had been working with: "I told him to cease action on our behalf. He told me that he would talk to the boss about returning some of our money that we paid."

Neigel says that although originally he asked for the entire amount he paid to be refunded, "but later I thought better of it as they have probably done some work on our behalf. [On] March 19, 2009 I spoke with [the representative] and told him that I would accept $1,500 as a good-faith agreement as a return instead of the entire fee. He told me that his boss told him that there is no way they will give us any money back."

That's when Neigel heard about NeighborWorks Waco, a division of NeighborWorks America, which looked at the paperwork that Neigel says "was all Greek to me." NeighborWorks told him, "Hank, they haven't done a darn thing for you."

Although NeighborWorks was unable to help Neigel recover the funds that he'd paid the shady loan-modification operation, they did help him refinance into a conventional loan. He is now paying $863 a month.

His advice to others is to do your research to make sure you're working with a legitimate HUD-sponsored organization.

(Also see "Stop Foreclosure Rescue Scammers Before They Scam You" and "VA Loans: Homebuying Help for Veterans.")

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