LOAN Modification Scams are growing like wild fire and its consider white collar crime. In my opinion these types of crime are hard to prosecute and if prosecuted it gets minimum time in a Federal prison and sometime just a slap on the wrist by the court system. Therefore, you should know the warning signs to look for. Usually companies that does these types of fraud will just close their operations once they think that the heat is on, they know that it takes times for the law to collect evidence and prosecute. I have always reminded you folks to be realistic about your situation and understand and accept what situation your in and move on to make a logical decision. Here are some more tips to spot these scammers.
1. A person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure. They have found a way to collect fees and have a third part cash the check to avoid evidence of receiving money from you. Sometimes its written in the contract that you are not to pay any fees till the modification or Trial payment is approved. But most of the contracts are long and tedious therefore most of the time are not read properly.
2. A person guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan except from your bank or its assigned investors. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you. This is actually the scam that most desperate homeowners fall for. If in doubt call your bank, that is the most direct and simple advise yet it amazes me some people would rather believe a third party with absolutely no connection to the banks.
3. A person advises you to stop paying your mortgage company and pays them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, again contact your mortgage lender. Missing your payment does not justify hardship, lenders will ask for your two-year income history and recent paychecks. Honestly by missing they might take notice but be careful if you are a strategic defaulter because once you missed a payment the second, third payments being defaulted will come fast before you know it you have missed 4. If you want to keep your house you have to make sure you have funds to reinstate your loans.
4. A person pressures you to sign over the deed to your home or sign any paperwork that you haven’t had a chance to read, and you don’t fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.
These people or companies will offer for you to buy back your property once the modification becomes successful, but once you have signed the deed over, they want you to pay them rent. Lenders will not allow a distress homeowner or their relatives to buy back the property, its illegal. So, what do you think this is? A definite scam.
5. A person claims to offer “government-approved” or “official government” loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs
Real stories about another scam
Like most homeowners, Jane Doe was happy to be a homeowner and making her payments on time. But in fall 2009, she fell behind on her mortgage payments after she lost her job. She received a flyer in the mail from a company offering loan modification services. She trusted the company with the “official-looking” logo to help her save her home, not realizing the company was not affiliated with the government at all.
The company verbally guaranteed results and they told her about a money-back guarantee if she did not get a loan modification to save her home from foreclosure. Like so many others, Ms. Campos did not realize that paying an upfront fee and getting guarantees or promises were signs of a scam, and felt protected because she signed a contract.
Jane Doe got suspicious when she didn’t receive the loan modification she had hoped for, nor did she receive any communication from her lender. After collecting some initial information, the loan modification company also stopped returning her calls. She soon realized that nothing had been done on her behalf, despite their promises to the contrary and the money she paid. Jane Doe asked the company for a refund but they refused to return the $1,250 upfront fee she paid. Saving her home from foreclosure seemed to be more distant and she didn’t know where to turn.
After thinking she had run out of options, Jane Doe found a local HUD-approved counseling agency that could help her – for free after attending a foreclosure prevention event sponsored by local non-profits and lenders. Through the counseling agency, Jane Doe has been able to get a trial modification through Making Home Affordable, the federal program. She has also been able to file a scam report against the loan modification company, and recently won a small claims court settlement against them with the help of the Lawyer’s Committee for Civil Rights under Law. But most importantly, she has been able to save her home.
Please take action by doing any or all of the following:
1. Call the Homeowner’s Hope Hotline:
1-888-995-HOPE (4673)
Assistance is available in 20 languages upon request.
2. File a complaint online through the Loan Scam Prevention Network.
Report now
3. Call the Federal Trade Commission (FTC) at 877-FTC-HELP (1-877-382-4357) or submit your complaint online in English or in Spanish.
4. You can contact your state Attorney General or another local authority in your state. Check here for a list of contact information for Attorneys General.
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Thanks for all your inquiries and comments; please call Ken Go of 1st Innovative Finance Group at (562) 508-7048 or write to [email protected]. We can help you find options for your mortgage needs.