Darrell and Jeannie Lyon of Tulalip find themselves in a precarious but yet familiar situation with their mortgage.
"We're upside down," Jeannie said, "with the way the economy is we owe more than what the house is worth."
The Lyons are currently in an adjustable rate mortgage at eight percent, so they were looking to get that rate lowered, and the opportunity to do that just happened to be a phone call away.
"A gentleman had called, said he does the Obama home modification, they said, 'Are you happy with your mortgage payment?'" she remembered.
The call came from Home Credit Law Center in Los Angeles, the Lyons signed an agreement that says "modification services," and wrote a $2,500 check.
The money paid upfront made sense to Darrell if they got approved.
"They told us they were going to put us on a fixed rate on a 30-year loan between two and three percent," he said.
While Jeannie and Darrell waited for good news, they didn't know nothing was being done on that loan modification.
"You put trust in people we're trusting people," Jeannie said.
Not sure what was happening with her case, Jeannie called me and I spoke to Brian Linnekens owner of the Home Credit Law Center. He says the Lyons actually bought a "forensic review" of their mortgage and not a loan modification.
"We've seen this over the last few years, with all of the publicity over predatory lending," said Deb Bortner from the Department of Financial Institutions.
Bortner says forensic reviews are used to find issues or illegality with a loan. She says the pitch usually goes along the lines of, "'Let us look at your loan and we'll see if you are a victim of predatory lending.then you can go to your lender and threaten them.'" She adds, "I don't see that working."
So lets go back to that contract the Lyons signed -- was it for a forensic review or a loan modification? Both the Lyons and the Department of Financial Institutions believed it was for a loan modification. If that's the case, even if he's acting on their behalf for the forensic review, Mr. Linnekens is in deep trouble.
"He either has to be licensed as an attorney if he's going to provide that service and he's not licensed to practice here or he has to be a loan originator and he's not either," Bortner said.
The Department of Financial Institutions has launched a full investigation into Home Credit Law Center. In the meantime the Lyons feel hurt and deceived by the very people who promised to help.
"I wouldn't treat someone like that and I guess I wouldn't expect someone else to treat me like that," said Jeannie.
So what will happen to that Mr. Linnekens? We called after we found out the state was investigating, and he won't return my calls. DFI says if it finds wrongdoing, it may go to the California bar and file a complaint against the Linneken's license.
If someone approaches you or calls you about a home loan modification, and you need one, hang up. Try to see a HUD counselor, their reviews are free. Once you find a lender, make sure it's local and they're licensed. You can check that license with the Department of Financial Institutions website.