St. Louis, Mo., Sept. 20, 2010
- A company from West St. Louis County that promised to try to reduce monthly mortgage payments for hundreds of homeowners across the U.S. apparently has gone out of business, leaving many of its customers at even higher risk of foreclosure.
The Better Business Bureau (BBB) says the case should send a strong warning to desperate property owners who are considering paying loan modification companies for help in saving their homes.
“They have been left out to dry,” said Elijah H. Norton
, chief executive officer of Home Safe Financial Assistance, Inc.,
referring to many of those who had contracted with his company. “The majority of them were in horrible financial straits, and now they are screwed.”
The BBB said the company began operating in the Earth City, Mo., area earlier this year before relocating briefly to Kansas City and then shutting its doors. The company was headed by Derek Doherty
of the St. Louis area and Norton, of Kansas City. Norton, the company CEO, blames company mismanagement for the problems.
Several consumers told the BBB that they paid Home Safe Financial Assistance between $600 and $1,600 on promises that the company could help get them out of debt by reducing their home loan payments, but the company did little or nothing to help them.
Michelle L. Corey, BBB president and CEO, said the problems associated with Home Safe Financial Assistance highlight the risk consumers take in dealing with loan modification companies. “These continue to be very stressful economic times for many people and there are businesses out there making promises that they simply can’t keep,” she said.
“Consumers should look at every possible option before handing money over to a company that claims it can reduce their home loans and turn their financial storm clouds into blue skies and sunshine,” she said.
In addition to Home Safe Financial Assistance, two other companies became involved in the failed venture: Financial Hope for America
of Temecula, Calif., and Capital Debt Management, Inc.,
of St. Peters, Mo. After Home Safe Financial Assistance shut down, it transferred its clients to Financial Hope for America, which has been trying to collect additional payments from former Home Safe Financial customers.
Financial Hope of America, also known as Certified Financial Protection Group
, has a history of unanswered BBB complaints and an “F” grade with the Los Angeles BBB.
Capital Debt Management, Inc., is operated by former officials and employees of Car Safe, a broker of extended auto service contracts that was sued last year by the Missouri attorney general’s office.
Officials with Capital Debt Management told the BBB that the company’s role was to market and sell loan modification agreements to consumers on behalf of Home Safe Financial Assistance.
Capital Debt's manager, Jimmy Pyant, said of Home Safe, “They almost put us out of business. It wasn’t a good situation for us or the clients.”
A neonatal nurse and the mother of two infants said she was on the verge of losing her home in Mebane, N.C., when her stepfather saw a TV commercial for Home Safe Financial Assistance earlier this year. She said a customer service representative who answered her call told her she could still save her home by hiring Home Safe Financial Assistance to negotiate a loan modification on her behalf. The cost would be $950 up front and several monthly payments of $250 each.
Sometime later, at her foreclosure hearing, the attorney for the bank which held her mortgage told her Home Safe Financial had never contacted the bank. She said she has tried repeatedly to get the refund she was promised, but with no luck. Even after she lost her home, she said, Financial Hope for America has continued to try to take money out of an account she has since closed.
A woman from Pattersonville, N.Y., said Home Safe Financial Assistance was the second home loan modification company that had failed her. She said she lost $3,500 to a California company in 2009 when that company promised to reduce her loan payment, but did not. She said she panicked in January of this year when she received foreclosure papers on her home and contacted Home Safe Financial Assistance in a frantic attempt to keep her home. A Home Safe representative told her the firm could get her loan principal cut by $30,000 and her monthly payments cut from $1,700 to about $1,000.
She said Home Safe went out of business after taking about $1,500 of her money and she now is being asked to pay an additional $199 a month to Financial Hope for America, which took over the account. “I’ve pretty much lost my home,” she said. “I have six months to get out. I can’t believe they are doing this to people.”
Norton, the CEO of Home Safe Financial, said that while he handled the company’s day-to-day operations, the owner was Derek Doherty. “The company (Home Safe Financial) was not a scam,” Norton said. “It was a legitimate company.” He said he left the company in July and described it at that time as “kind of a mess. It was just a tragedy; it was a failed business.”
Doherty did not return a BBB call to his cell phone.
Norton and Capital Debt Management’s owner John “Jake” Ehlinger said Capital Debt Management was responsible for running the national TV advertising and making the home loan modification sales to customers. Ehlinger, a former owner of Car Safe who sold his share in that business earlier this year, said he initially believed Home Safe Financial was helping clients escape foreclosure.
“At the end of the day, I feel somewhat liable for what these people have been through,” Ehlinger said of Home Safe Financial’s clients. “I thought I was helping people. We thought we were helping these people save their homes.” He said he believes as many as 300 homeowners may have been harmed. He also said Doherty and Home Safe Financial still owe his company $200,000.
Ehlinger said his company still sells home loan modification services, but for another company.
The BBB offers the following tips for homeowners having problems meeting their loan payment obligations:
- Try to work with the bank or other institution that holds your loan before going to a third party. Arrange a meeting with your lender to try to work out a payment agreement acceptable to both of you.
- Be extremely cautious when looking to contract with a company that promises to modify your home loan. Scrutinize any contract carefully before signing anything or paying any money for loan modification work. Be especially cautious of home loan modification companies that advise you to suspend making loan payments while they work on your case.
- Check BBB Reliability Reports at www.bbb.org or by calling 414-847-6000 (metro Milwaukee), 920-734-4352 (NE Wisconsin) or 800-273-1002 (elsewhere in Wisconsin).