Beware of Loan Modification Scams!
As if economic turmoil and a credit crunch isn’t enough, homeowners facing foreclosure are now dealing with loan modification scams and unscrupulous businesses looking to prey on their desperation and fear.
“This has not been a well-defined program from day one,” said TARP special inspector general Neil Barofsky of the government loan modification program, warning against loan modification scams. “Criminals speed on that type of confusion.”
Barofsky said that there has been in huge “uptick” in loan modification scams targeted at struggling homeowners.
Keep your eye out for these suspicious signs of loan modification scams.
- Beware of promises that seem too good to be true. Most scams and swindles operate on the often overly optimistic hopes of homeowners who are in a world of trouble. If a business offers a guarantee to stop the foreclosure process, you should automatically be wary.
- Avoid businesses that tell you not to contact your lender. If you are having difficulty making mortgage payments, your first step should be to contact your lender. Anyone who urges you to stonewall your lender, an attorney, or a credit counselor probably doesn’t have your best interests at heart. In fact, sometimes the only way to tell if a program is fake or real is to ask your lender. Some loan modification scams pretend to be affiliated with the government or your lender. Then they charge high fees and disappear with your money. Before signing on the dotted line, ask your lender if a program is phony.
- Beware of companies that ask for money up front or via a cashier’s check. Most reputable services do not ask for money before they have given you a service, so strange financial requests should be a big tip off that a company is not on the level. Some scam artists tell you that they will negotiate a deal on your behalf if you provide payment. Then they run off with your money!
- Do not give anyone money to pay your mortgage for you. This is definitely a sign that a disreputable business may be trying to get a hold of your house using disingenuous means. This type of business will tell you they are making payments, but of course they are pocketing your money. By the time you realize this, the bank may have already seized your house.
- Never sign over your property to anyone else. Some dishonest companies offer to help you dodge foreclosure by having you transfer the deed of title to them. Frequently, the house will end up in foreclosure and you will walk away with a lot of debts but without anything to show for it.
- Never sign any documents without reading and understanding them completely first. Don’t allow anyone to pressure you to sign documents before you completely understand them and know what you’re getting into. Some loan modification scams work by telling you that you are signing paperwork for a new loan modification when you are, in fact, transferring the title of your property. So not only should you read it before you sign it, you should also understand it before you sign it!
The most important thing to remember when trying to avoid loan modification scams is this: Keep your cool. Do your research. Call your bank, even if it seems scary. And contact trusted loan modification authorities if an offer seems too good to be true.
Beware of Loan Modification Scams!
