|Maryland regulators have put the brakes on a foreclosure bailout transaction that they say may have left the borrower stripped of home equity.
Vicki Randles was about to lose her Baltimore house through a foreclosure when AZP Home Owners offered her a deal.
AZP would purchase the home and then rent it back to Randles, who was out of work after being recently diagnosed with cancer. AZP would payoff the mortgage and after three years Randles of making payments Randles would once again own her home.
But Maryland state regulators say that AZP was in the deal to make a profit, not help Randles.
"She wasn't really changing anything by having them attempt to assist her," Calvin Wink, an investigator in the enforcement unit of the Maryland Department of Labor, Licensing and Regulation, told MortgageDaily.com.
"She was paying the same amount of money," Wink said. "The whole purpose of the situation is to take the equity, the money, out of the home and eventually let it go back into foreclosure. Everyone would have taken a loss, except AZP; they would have profited.
"That's speculation, but that's based on my training, knowledge and experience," he said.
AZP did transfer the home into their name, did start making payments but did not pay off the mortgage, Wink said. "She was still responsible for the home and indebted to them."
AZP could not be reached to comment.
The state stepped in and, working with AZP and its lawyers, nullified the deal and transferred the home back to Randles, Wink said.
AZP was not licensed as a mortgage broker or lender, Wink said.
"Our concern here was that the home get back in her name," he said.
Wink said homeowners who have fallen behind on payments and facing foreclosure should talk to their mortgage company before trying to cut any deals with so-called foreclosure experts.
"The first phone call should be to the mortgage company," he said. "Tell them you have a problem. Most companies have safeguards and allow things to take place to help the homeowner out.
"Most people are embarrassed that they can't meet their obligations," Wink continued. "It's a social issue. The bottom line is the mortgage company wants you to say in the house. The lender doesn't want your house, they want your money ... and if you lose, they lose so they'll work with people as much as they can."