Mortgage Modification and Foreclosure Scam

Carol Kerber

Carol Kerber was trying to do the right thing when she reached out for help to save her home, but like thousands of New Yorkers, she fell victim to a scam. In 2015, Carol Kerber lost her job and because she was approaching 70 years old, she had a tough time finding new employment. With the bills piling up and little money coming in, Carol fell behind on her mortgage payments. By 2017, Carol’s mortgage was in default and she felt like she was running out of options.


One night, while watching television, Carol saw a commercial advertising help for struggling homeowners. Carol called the number and when she spoke with an attorney on the phone, he said “Don’t pay the mortgage company, just pay me, I’ll take care of everything.” Carol laments, “I should have realized something was off.”


Shruti Joshi, a staff attorney for the Legal Aid Society of Northeastern New York (LASNNY), explains that this was an attorney licensed in New York and Vermont who likely had ties with such advertisement companies in order to get referrals such as Carol’s. He convinced Carol to pay him a monthly retainer, with a recurring transfer directly from her bank account. Unfortunately, while Carol was paying him this retainer, he was doing very little on her behalf.


Carol says, “I thought the attorney was doing something for me, but the mortgage company continued to send me foreclosure papers. I assumed the money I sent him was going towards my mortgage.” Additionally, the attorney was asking Carol to gather a lot of documents and for a woman in her position; this legwork was a lot to ask. Attorney Joshi says, “There repeatedly asked her for the same documents. Carol was running around to the County Clerk’s office, making copies, and more. This was difficult for her because of her age, notwithstanding that she was paying an attorney for the work she had to do herself.”


Eventually, someone from the County Clerk’s office referred Carol to Legal Aid and Attorney Joshi was able to take on the case. Joshi explains that Legal Aid actually took on two cases for Carol. The first was representing her in settlement conferences and requesting a loan modification. Attorney Joshi says that Carol qualified for a modification and her foreclosure was discontinued. As for the foreclosure scam, Attorney Joshi explains that it was only after she filed a civil lawsuit against the attorney to recover the money that his malpractice insurance carrier came around to negotiate with her. She continues, “after a lot of negotiations, we were able to recover $5,500 of the $6,950 that Carol had paid this attorney.”


Attorney Joshi says, “We were able to get two good outcomes for Carol, but unfortunately we have seen a surge in cases like this.” She continues, “Our clients are vulnerable and they often fall prey to these types of scams.” Today, Carol is happily still in her home and relieved that the ordeal is over. She says, “The foreclosure case had been going on since 2015 and LASNNY was able to take care of things within just a few months.” She continues, “I was in tears every day until they stepped in.”


Marlene Morales, Managing Attorney of  LASNNY’s Foreclosure Prevention Project, says “homeowners who have fallen behind on their mortgage payments are typically targeted with multiple solicitations with too-good-to-be-true promises.  Carol’s story highlights the need for the no-cost, high quality legal representation that LASNNY is able to provide through its Foreclosure Prevention Project.”.