Can you recommend a “real” loan modification company?  That’s a question I’m asked repeatedly.  Viewers see one of the many I-Team investigations focusing on cheats and frauds in the loan modification business and they want to make sure they don’t end up a victim.

Sadly, people who are already behind on their mortgage and struggling to pay their other bills are too fast to write big checks to loan mod companies, many of which turn out to be completely illegitimate.   If foreclosure is imminent,  the last thing people should do is give away the money they’ll probably need for storage, a moving van, first and last month’s rent and a security deposit for a rental.

The California Department of Real Estate warns that there are “numerous rogue and dishonest operators” in the modification market now, and San Diego is a hot bed!  The D.R.E. has 750 open investigations of loan mod companies.  185 companies have been ordered to “desist and refrain” from business because they’re violating the law. 

Go to this website to read which companies have been told to halt their practices, and of course, don’t use them!

http://www.dre.ca.gov/cons_drs.asp

The D.R.E warns that homeowners should first try to work with their lender on their loan.  Put in a call to the loss mitigation department and keep track of all phone calls and responses. (I’ve heard from several people that banks seem to “lose” the information mailed to them.)

If you feel you can’t do it yourself, then be extra careful about the person you hire.  Big promises are a big red flag.  Avoid companies that tell you that you “must act now”, or “we’ll give you a discount if you pay upfront”.  Some other common tactics include over-promising and pressure selling to “close the deal.”  One company we’re investigating tells clients that they can reduce the interest rate to 2 percent, can reduce the balance of the loan, waive the late fees, waive the legal fees, and protect their credit!  Really?!  Woudn’t every person in America sign up for that if it were true? 

The fact is, many of these companies are boiler rooms with low paid staffers working the phones.   Those workers often read off of an actual script!  They’re trained at “selling” these loan modifications, and I believe some of the workers don’t realize they’re scamming people.  They’re paid less than $10 an hour, but they are told they’ll get commission on every person they sign up.  (Often the companies ripping off homeowners are also ripping off their own employees and never end up paying the “commission.”  Some companies just fire the workers before pay day and keep a steady stream of new hires by posting adds on Craigslist.  Yes, this is breaking the law, but enforcement agencies are swamped right now.)

If you are working with some sort of real estate office doing loan modifications, check the license history of the agent and broker.  Go to the D.R.E. website and just put in the name of the agent/broker and company for that matter.  (This is important, two of the companies I’ve focussed on recently had brokers with big red flags on thier license history!  One of the brokers had his license revoked 27 years previously!)   Click below to check a license history.

 http://www2.dre.ca.gov/PublicASP/pplinfo.asp

Real estate companies must have an approved advance fee agreement before they take upfront money from clients.   Go to this part of the D.R.E website for an updated listing of those companies. 

http://www.dre.ca.gov/mlb_adv_fees_list.html

Also effective July 1, 2009,  so called “foreclosure consultants” will also have to register with the California Attorney General’s Office.  A foreclosure consultant is defined as anyone who claims they can postpone or save a home from forclosure or modify loans.

A link to the Attorney General’s Office website is below.

http://www.ag.ca.gov/register.php

There is a new wave of law offices doing loan modifications.  Even when dealing with an attorney, homeowners should do their homework.  Make sure you check the license history of the attorney with the State Bar of California.  You may find, as I have, that the attorneys are brand new to the field of law.  Also, specifically ask who will be working on your loan packet.  Will the attorney be doing the work, be supervising every correspondence, etc.?  The law on this is a grey area, but I doubt people want to pay thousands of dollars to a “supervising attorney” just to have a low paid staff person make all the phone calls, write all the letters, and negotiate with the bank.   

Click here to check an attorney’s status with the State Bar. 

http://members.calbar.ca.gov/search/member.aspx

The D.R.E also directs people to check the history of the loan modification company with the Better Business Bureau.  This is a good idea.  Just beware, many of these companies change names quickly.  I’ve researched one company that had a decent rating with the BBB for a while before mass complaints poured in. 

This is not a complete list of warnings, just the things that the I -Team producers or I do as we look into complaints about loan modification companies.   To read more warnings,  Go to the D.R.E website for additional fraud warnings related to loan modification scams.

http://www.dre.ca.gov/pdf_docs/FraudWarningsCaDRE03_2009.pdf

It’s a funny sounding word with serious consequences. Smelt is the subject of our I-Team report on the water crisis San Diego County is facing.

The small fish lives in the Sacramento-San Joaquin River Delta in Northern California. Its population is down 90% in the past 20 years, making it an endangered species.

Adding to that pressure, smelt is also taking the blame for the water shortages in the state because the fish often gets caught and killed in the pumps that move water through the Delta and to 52 million Californians who get water from that source.

In the course of our newsgathering, it became apparant that this fish isn’t the sole reason for our water woes.

Dennis Cushman of the San Diego County Water Authority told us: “We didn’t arrive here overnight because of one fish species. We have a fundamental crisis.”

That crisis is larger than many San Diegans want to consider. We import 85% of our county water from outside the region; we receive very little rainfall each year and when we do, we don’t collect the water for a reserve; we’re in the middle of a three year drought that many say is now a new norm for the area.

Bruce Reznik of San Diego Coastkeeper say he doesn’t use the term “drought” anymore: “One of my favorite phrases is, ‘it’s not a drought, it’s a trend.’”

Reznik reminds San Diegans we live in a desert and we need less lush lawns and more thoughtful water planning. “We need to change our way of thinking,” he says.

What You Can Do:

You can save water by sweeping a patio, instread of washing it. You
can limit showers to five minutes or less (You’ll save 2.5 gallons of water per minute). For more water-wise tips, check out the Water Authority’s 20 Gallon Challenge.  The 20 gallon challenge is an effort for San Diegans to save 20 gallons of water per person, per day.

The Water Authority has a list of manadatory conservation measures throughout San Diego County.

No doubt, this is a tough economy. Housing prices have dipped and many homeowners are facing foreclosure. That’s why the state of California has established a 90-day moratorium on housing foreclosures.

The new law called the California Foreclosure Prevention Act is aimed to keep homeowners in their homes. It requires loan companies to prove they how they’ve tried to modify a delinquent loan before foreclosing on the property.

Since 2007, California has had over 365,000 foreclosures.

With a high rate of foreclosures comes offers to avoid the foreclosure. This week, the San Diego district attorney arraigned 18 defendants on charges connected to a land patent scam that gave false hope to homeowners facing foreclosure. Prosecutor Marlene Coyne alleges Larry Smith is the ringleader of the land patent scam. Smith pleaded not guilty to the charges which include conspiracy to commit grand theft, grand theft and conspiracy to do a deceitful practice while acting as a mortgage foreclosure consultant.

The 10News I-Team has been following the case for over a year after victims told us how they paid Smith and his associates thousands of dollars in an attempt to save their homes. They told us Smith promised to create a land patent which would create a sovereign nation for the residence and therefore prevent anyone, including banks and lenders from foreclosing on the property.

The district attorney has heard from 20 victims. They would like to hear from anyone with additional information about the land patent offer. Prosecutor Coyne can be reached at (619) 531-3974.

 A recent I-Team story introduced you to Mark Kolowich, the man behind an elaborate online prescription medication ring. Kolowich sold Viagra and a Viagra knockoff made in India.

“The business grew really quickly,” he says.  “My first year I did just under a $1 million in revenue. Three years later we were doing close to $8 million in revenue a year.”

Kolowich was on pace to earn $24 million the year he was arrested.  His buyers were all over the world and Kolowich shipped hundreds of the prescription orders each day. The problem? The drug sales weren’t legal. Kolowich wasn’t a doctor, a pharmacist or anyone licensed to distribute prescription medicine. He sold the meds anyway — just to make a profit.  But the law caught up with him. Kolowich pleaded guilty and was sentenced to 51 months in prison. He served 37 months.

Another company, Affpower Enterprise is in Federal Court facing charges of selling consumers prescription medicines over the web. The company made $126 million in two years.

Consumers have different reasons for buying medications online — the pills might be cheaper on the Internet; or the patient may be too embarassed to ask a doctor for a prescription.

Whatever the reason, consumers need to know the Internet prescriptions are not always what they seem. The pills could be fakes which means they might be too strong, not strong at all or even a placebo, which has no value at all.

Worse, the medications could interact with a patient’s other mediciations or medical conditions, resulting in injuries or even death.

That’s why the Food & Drug Administration has been warning consumers about the dangers of buying prescription medications online. They also advise consumers how to check out the credentials of an online pharmacy.

Kaiser pharmacist Jamie Mangham says, “When buying medications online, you never really know what you’re going to get.”

“Your health and safety are the biggest concerns.”

You probably haven’t heard of the term “Negative Option Billing” but chances are you know about it anyway. It’s the type of billing where unless you say “No” to an offer, you receive it. The implied “Yes” can be a hassle too.

Now the Federal Trade Commission is considering changing what they call the “Negative Acceptance Rule.” They’re asking the public to comment on “Pre-Notification Negative Option Plans.”

According to the FTC, “In such a plan, consumers receive periodic announcements of upcoming merchandise and have a set period to contact the company and decline the item. If they remain silent, the company sends them the merchandise.”

Negative Option Billing is common for offers like book clubs where once a consumer signs up, he or she receives a book every month until the consumer declines the offer. Consumers often have trouble canceling the offers which can be frustrating.

The deadline to comment to the FTC on Negative Option Plans is July 27, 2009.

Submit written comments by referring to “Pre-Notification Negative Option Rule Review, Matter No. P064202.” The address is Federal Trade Commission/Office of the Secretary, Room H-135 (Annex Q), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

You can also file comments with the FTC online.

Telemarketing calls seemed like a thing of the past. Since the National Do-Not-Call Registry came around in June 2003, consumers could sign up their cell phone and landline phone numbers to stop the unsolicited and unwanted calls.

But now were hearing about unwanted calls about a car warranty offer. The calls come in to cell phones, landline phones and even to consumers who don’t own a car.

Two lawsuits, one in Indiana and another in North Dakota,  allege a San Diego company, SVM is one of the companies making those unwanted calls. SVM  is run by Mike Moneymaker. The I-Team tried to confront Moneymaker but he lives in a gated community where we didn’t have access. At his Del Mar area office, we were told Moneymaker is simply a tenant and uses the address as “a virtual office” where he receives calls and mail.

The unsolicited calls are known as robo-calls because they’re automatically generated by computers. U.S. Senator Charles Schumer of New York received robo-calls on his cell phone recently while he was in a health care meeting on Capital Hill.

Schumer says the calls are “bogus” and has asked the Federal Trade Commission (FTC) to look into the matter. In a letter to Schumer, FTC Chairman Jon Leibowitz said, “Law enforcement action in this area can be expected imminently.”

So far the Better Business Bureau has received 300,000 inquiries about the calls and 4,000 complaints. Officials in 40 states are investigating robo-calls.

The I-Team contacted California Attorney General Jerry Brown’s office about robo-calls, but have not heard back.

The FTC would like to hear from consumers who have received robo-calls.

Should You Open the Door?

Recently, our vivacious German Short-Haired Pointer started barking frantically at our front door.  A quick look through the peek hole revealed a strange man standing on my porch.   The kids were playing a loud game of freeze tag,  the dog was barking….without a second thought, I opened it. 

There stood a very well dressed young man.  He was selling a cleaning product and was eager to tell me about it.  He dove into a 15 minute sales pitch.  I didn’t have the heart to stop him.  Times are tough. He’s trying to make some money,  I thought.  When he was done, I thanked him for his professionalism but politely told him I could not afford to spend $250 on cleaning solution.  He instantly became angry and accused me of wasting his time.  He left rather quickly, but I could hear him yelling obscenities as he walked down the driveway.  Instantly, I gave it a thought, like I should have done before I opened the door.  I became worried about the safety of my family. I ticked off a man I knew nothing about.  Will he come back?  Should I have opened the door?

Tonight, the ITeam investigates a traveling sales crew making their rounds throughout San Diego county.  We found the crew living in a Vista motel.

We wanted to find out who ran the business after a young woman who had worked for the company called us from an Oceanside bus station.  She was stranded, telling our ITeam that her boss left her there.  She had no money and wanted to get back home to Baltimore Maryland.

Through our research, we came across a website with an incredible amount of information on the traveling sales industry.  It was developed by Phil Ellenbecker of Wisconsin.  Phil’s daughter, Malinda,  was working with a sales crew when the van she was traveling in crashed, killing her and 6 other crew members.  My Managing Editor and I spoke with Phil on the phone.  He’s a delightful man with a hearty laugh, one that helps relieve the sadness you feel after he tells you about the horrible accidents involving young adults traveling with crews.  Phil’s website also warns about the dangers to people opening their doors to crew members.  He lists countless reports of crimes committed by traveling salespeople while on the job. 

His tremendous amount of research on the industry helped pass a new law in Wisconsin last march.  It’s called Malinda’s Act, named after Phil’s daughter.  The new law will protect crew members from abusive employers and set regulations that protect homeowners. 

Earlene Williams of Parent Watch says this law is the best one on the books.  “It’s as perfect as a law can be,” she said.

Parent Watch is a volunteer organization that helps crew members abandoned by their managers get back home. It also educates parents about dangers in the traveling sales industry.

In California, salespeople over the age of 18, working door to door, are considered independent contractors.  They’re exempt from California’s wage and hour laws.

The company working out of the Vista hotel is DP Sales Inc.   Owner Willie Jackson has been working in the traveling sales business for years.  In tonight’s ITeam investigation, Lauren Reynolds talks to him about his Vista crew.