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8 Ways to Spot Loan Modification Scams

By:
JR Hevron - MortgageLoan.com
Be wary of anyone who promises that they can “fix” your mortgage for you. Anything they “claim” they can do, you can do better.

 With as many as 8 million American homeowners facing foreclosure in the next year, there are many pop-up “rescue” companies swooping in to take advantage of people in desperate financial situations.
 
Even if you haven’t been experiencing issues with making payments on your mortgage, you’ve probably noticed ads on TV, radio, online, and in print that 100% guarantee to modify your mortgage to make it more affordable. Maybe they’ve even found a way to contact you directly and you’ve been tempted to go along.
 
The truth is that whatever they promise to do for you—and some charge up to $7,500—you can likely do just as well if not better yourself and for free.
 
Be extremely wary of scams if you read or hear any of the following from a company or individual that promises to “fix” your mortgage:  
 
1) They want upfront fees: This is illegal. Foreclosure consultants are not allowed to collect any money before performing services for you.
 
2) They want you to transfer the title of your house to their company: This is often a simple scam to get you to hand over your home. Oftentimes, the promise is that you will be able to buy it back or lease it, but most people just get evicted.
 
3) They want you to pay your mortgage payments to their company, rather than to your lender: Quite simply, they will in all likelihood keep your money for themselves.
 
4) They ask that you ignore letters from your lender or loan servicer: Actually, you should be reading those letters and trying to deal with them.
 
5) They rush you into signing documents without reading them first: This is often a trick where you think that you are signing official documents to help your cause, but you are actually transferring over ownership of your house. This sadly happens quite frequently.
6) They ask you to not consult with a lawyer: Come on! If their business was legit, why would consulting with a lawyer be a problem?
7) They guarantee you a loan modification: How is this even possible without knowing your situation?
 
8) They tell you not to talk to government-approved counselors for advice: this is exactly what you should be doing.
 
So, what should you do?
First of all, If you are falling behind on your mortgage, start seeking help before you go into foreclosure.
  • Learn as much about the mortgage modification process as possible. 
  • Call your lender yourself and see if you can make a deal. Foreclosure is expensive for your lender, and therefore your lender is far more likely to make a deal with you.
  • Get in touch with a housing counselor at the U.S. Dept. of Housing & Urban Development (HUD) or a local (not national) HOPE housing counselor.
People in desperate situations often feel powerless and are not thinking clearly or using common sense. They do not realize that they actually have the power to help themselves.
 

They so want a miracle that they forget that if it sounds too good to be true… it probably is.  

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