The Commercial Appeal
By: Amos Maki
August 19, 2010
A new program will inform citizens about predatory lending that targets Memphis homeowners who are attempting to refinance mortgages or prevent foreclosure.
The effort, spearheaded by the Lawyers' Committee for Civil Rights Under Law, the U.S. Department of Housing and Urban Development, Neighborworks America and Fannie Mae, is designed to warn property owners about shady loan modification and foreclosure-prevention offers.
Mayor A C Wharton announced the education program Wednesday morning, saying lenders who target homeowners facing foreclosure were like vultures "picking the carcass" of a victim.
Wharton said the city's high poverty rate and low financial literacy of residents make Memphis a target for foreclosure scammers.
The educational campaign dovetails with a Memphis and Shelby County lawsuit against Wells Fargo.
The complaint charges that the company targeted predominantly black neighborhoods, getting residents with high consumer debt to refinance and use their homes as collateral.
As a result, the suit alleges, loans in predominantly black areas of Memphis are eight times more likely to go into foreclosure than in white areas.
Wells has denied it did anything wrong.
Wharton said that while the city is seeking to recoup damages from Wells Fargo in court, education is the best way to protect homeowners.
"Our approach is to educate, but in the end we will not hesitate to litigate," he said.
A website, preventloanscams.org , gives home owners access to information on scams, including enforcement actions government agencies have taken.
Wharton and local leaders in foreclosure prevention and housing assistance advised to always be wary of firms that offer assistance for a fee.
"If you are charged a fee for services you can get for free, you need to be careful," said Sapna V. Raj, managing attorney for the Memphis Fair Housing Center.
"We have a service with trained people to do this work at no charge," said Tim Bolding, executive director of United Housing Inc., an affiliate of Neighborworks America.
The Memphis Housing Counseling Network, a group of nonprofit organizations that provide housing and foreclosure counseling, will serve as the clearinghouse for calls from homeowners who have complaints about scam operators. To reach the Housing Counseling Network, call 725-8361.