Caught in foreclosure relief scam, a couple loses their home

Journal Star – Denise and Kevin Barret thought they had found a solution earlier this year after they fell behind on their mortgage.

One night in February, they saw a television ad for the Federal Loan Modification Law Center, a very official-sounding entity that promised it could reduce homeowners’ payments while saving their homes from foreclosure.

So the Barrets called the number and were told that for an initial payment of $995 the company could renegotiate the couple’s delinquent mortgage and get them a better interest rate and more affordable payments.

It sounded like a good deal, and the company at the time had a reasonable rating with the Better Business Bureau, Denise Barret said.

So the Barrets signed up.

Denise said she was in contact with the company weekly as representatives told her they were negotiating with Liberty First Credit Union, the Barrets’ lender.

Every time the Barrets got a letter or phone call from Liberty First, Federal Loan Modification Law Center representatives told them to ignore it, saying it was just a scare tactic, Denise said.

“They kept telling us, ‘Don’t call the bank, it will just slow down the process. Don’t offer them any money,’” said Kevin Barret.

That’s exactly the opposite of what credible experts advise for homeowners who fall behind on their mortgages.

The result: Around the first of May, the Barrets received a letter from Liberty First, informing them their home was scheduled to be sold at auction.

Frantic, Denise said she called the credit union.

“Liberty First said they had never heard from them,” she said.

The Barrets bought a century-old house near 120th and Nebraska 2 in 2004. They paid $165,000.

The couple had moved back to Nebraska in 1999 after Kevin served in the Marine Corps. They initially settled in Eagle.

Denise said they fell in love with the converted bunkhouse on seven acres, which is not far from Otoe County, where the Barrets both grew up – she in Nebraska City, he in Syracuse.

At first they had a rent-to-own arrangement with the previous homeowners, and things went pretty well for a couple of years.

But then came 2006.

In February of that year, Kevin, who was 46 at the time, had a heart attack. He underwent quadruple bypass surgery the next month.

He had barely recovered when Denise was struck by a brain aneurysm in August of that year.

To help pay for their medical bills, the couple refinanced their mortgage and cashed out some of the equity in their home, which Kevin said at one time was as much as $60,000.

Things seemed as though they couldn’t get any worse for the couple, but then Kevin lost his job right before Thanksgiving.

The bad news continued just a few months later, when Denise, too, lost her job.

The Barrets again refinanced their mortgage in November 2007, increasing the mortgage debt from $148,000 to nearly $178,000 between a first and second mortgage, according to county real estate records.

Denise said their mortgage payment jumped from around $1,300 a month to more than $1,800.

In August 2008, the couple filed bankruptcy, just after they started falling behind on their mortgage payments.

County real estate records show Liberty First issued a default notice at the end of June 2008.

Kevin said they’d fall behind on payments, catch up, only to fall behind again.

While purporting to be helping the Barrets, the Federal Loan Modification Law Center was racking up complaints all over the country.

In April, the Federal Trade Commission filed a federal lawsuit against the company, alleging it misrepresented that it could obtain a loan modification or stop foreclosure in all cases.

The complaint also alleged that the company falsely claimed in radio and TV ads to be affiliated with the federal government.

Nabile “Bill” Anz, managing attorney for Federal Loan Modification and one of the people named in the FTC’s complaint, told the Orange County Register in April that the company may have been aggressive, but it had obeyed the law.

Since then, Anz seems to have changed his tune. On Aug. 4 he voluntarily resigned from the California State Bar Association, with charges pending against him.

According to a news release, the bar filed an application in July to have Anz declared “involuntarily inactive,” alleging he failed to perform for clients of the Federal Loan Modification Law Center and failed to refund fees to clients of the business.

The news release said Anz admitted the misconduct that was alleged in the application.

Some states have also taken action against Anz and his company.

In July, Wisconsin regulators banned the company from doing business there and ordered it to provide refunds to all its customers in the state.

That action likely is a moot point, as it appears the company is no longer doing business. Its Web site is no longer operational and its phone has been disconnected.

Mike Cameron, an attorney with the Nebraska Department of Banking and Finance, said the department has fielded a couple of complaints about the Federal Loan Modification Law Center.

“I’m thinking two or three at most,” he said.

Cameron said that because the company is already the subject of an FTC investigation, he refers complaints to the federal government.

Michael Snodgrass, executive director of NeighborWorks Lincoln, said two red flags with any foreclosure rescue offer are the requirement that you pay for it and a promise of a renegotiated interest rate or lower payments.

“If you have to pay something to save your house,” there is something wrong,” Snodgrass said.

He said NeighborWorks, which offers free foreclosure counseling among its many housing education services, never promises results.

Snodgrass said he has seen clients at NeighborWorks who have used or considered using foreclosure rescue companies.

“If you’re losing your home, you’re grasping at straws,” he said. “If you see an ad from a company, it’s awful tempting to look at.”

Denise and Kevin Barret will lose their home – there is no doubt about that now.

Earlier this month, they stood in a Lancaster County courtroom and agreed to be out of their house by the end of the month, which is Monday.

As they talked with a reporter Friday, a steady stream of people drove up their driveway and into their front yard to take advantage of their need to sell off possessions that won’t fit in their new home, a rented townhome near 61st and Vine streets.

In a way, their lives are coming full circle – the town home is in the same development they lived in shortly after they got married, Denise said.

She alternates between tears and anger.

She cries when she thinks about losing her home, the place she and her husband fought so hard to keep.

The tears turn to anger, though, when she thinks about all the help the government is handing out to banks and to people to buy houses and new cars.

“They’re giving these brand-new homeowners $8,000 bonuses,” she said. “Why aren’t they helping the people who are losing their homes?”

There are programs to help people facing foreclosure, but the Barrets say they found out about them too late.

Kevin says he’s talked to the Veterans Administration and a lawyer, but the response has been, “You should have brought this to us earlier.”

“If I had a nickel for every time I heard that, I’d be able to pay off our house,” he said.

Denise said she and her husband aren’t telling their story to get pity.

“We’re not doing it to make people feel sorry for us,” she said. “We just don’t want it to happen to them.”