A St. Charles County, Mo., marketing company with a troubled history in the mortgage modification business is the focus of new complaints that it convinced customers to pay thousands of dollars to help lower their home loan payments, but then did little or nothing to help them.
The Better Business Bureau (BBB) urges caution when dealing with Capital Debt Management, 3829 Veterans Memorial Parkway, St. Peters, MO. In September 2010, the company’s owner, John Jacob Ehlinger, told the BBB that his company was an innocent victim in the failure last year of Home Safe Financial Assistance, a mortgage modification company based in west St. Louis County.
Ehlinger said at that time that his company had done national marketing and sales work for Home Safe. He estimated that as many as 300 homeowners may have lost money to Home Safe when they paid for loan modification services, but got no help in modifying their loans.
Michelle Corey, BBB president and CEO of the BBB in St. Louis, said the newest round of complaints involving Capital Debt Management raises serious concerns about the firm. “For this company to be in the middle of two separate and questionable mortgage modification campaigns in less than a year is disturbing, to say the least,” Corey said. “The newest complaints appear strikingly similar to those received during the Home Safe debacle.”
Complaints about Capital Debt Management have come from several states, including Virginia, Florida, New Jersey, Ohio and Pennsylvania. Capital Debt Management has a BBB rating of F, the lowest rating possible.
Consumers say they signed up for mortgage modification services after receiving official-looking notices in the mail offering to help them cut their interest rates and house payments. Several said it appeared the notices had come from banks and other institutions where they had their loans. Some said the mailings appeared to be tied to a federal government program.
Several of the complainants said they phoned a toll-free number included in the mailing and spoke with a representative of Capital Debt Management. They said the representative offered to help them reduce their mortgage payments in return for paying up to $3,000.
Some said they notified the company within hours or days that they wanted to cancel the contract; others said they filed complaints with the BBB when they decided that they were not getting the services they had been promised. While some of the complainants ultimately received a refund, others say they did not.
“Every time I think about it, I feel like crying,” said a consumer from Elkins Park, Pa., who said he lost $2,990.
A notice received by a Bayonne, N.J., couple in December says that their home “may be eligible for special modification program guidelines created in conjunction with the 2009 Home Owner Affordability and Stability Plan.” It suggested that they could reduce their mortgage to a fixed rate of 2 percent from a variable rate of 6.1 percent and cut their monthly mortgage payment to $1,062 from $1,741.
The husband said he phoned a Capital Debt Management representative at a toll-free number and “the next thing I knew I was giving him my checking account number and they were taking out payments.” He said that after talking with his wife, he called the company back within a few days and notified it he was canceling the agreement. Still, he said, the company took out a second payment of $996.
Later, he was told that unless he supplied certain financial documents “your file immediately will be canceled.” Even though he did not supply the documents, the company eventually took a third $996 payment from his account. “I feel foolish,” he said.
The fiancé of a Navy veteran said he thought his notification was somehow connected to his pending bankruptcy. He called the toll-free number and gave his bank account number to a representative of Capital Debt Management. When he looked at the contract and learned it was not from his bank, he immediately tried to cancel. Still, a $996 payment was taken from his account. The fiancé said the company refunded his money only after he filed a complaint with the BBB.
Tom Ratz, who said he was acting chief financial officer of Capital Debt Management, said his company has been working with a company called USLMP of Huntington Beach, Calif., which does mortgage modification work. USLMP, which he says also uses the names Alliance or the Alliance Group, also has an “F” grade with the BBB, with more than 20 unanswered complaints.
He said that USLMP’s role was to handle the actual modification for the homeowners, but said USLMP “kind of dropped the ball.” He said Capital Debt Management has ended its relationship with USLMP, much like it did with Home Safe Financial Assistance, and is looking to take over servicing of the accounts itself. He said about 100 homeowners are affected. “We got them signed up, but they are not getting the service they expected,” he said. “We feel bad about what happened.” He said Capital Debt Management is no longer marketing to new customers.
Earlier this year, new Federal Trade Commission rules went into effect barring businesses from taking advance fees for home loan modification work.
On its website, Capital Debt Management says it offers forensic mortgage loan audits to help homeowners determine whether there were any violations of state or federal laws, overcharges or other problems associated with their loans. The audit then “can be used by borrowers as leverage to obtain a loan modification from the lender,” the site says.
In 2010, the FTC issued a consumer alert addressing what it called “forensic mortgage loan audit scams.” The FTC said: “There is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.”
The BBB offers the following tips for homeowners hoping to modify the terms of their home loans:
- Beware of any company that promises to help you modify your mortgage in return for an advance fee. As of Jan. 31, such business practice is illegal.
- Beware of any company asking you to pay for a forensic loan audit. These audits may not help you reduce your loan rates or mortgage payments.
- Try to work with the bank or other institution that holds your loan before going to a third party.
- Check BBB Business Reviews at www.bbb.org.