What are loan modifications? The answer is Loan modifications are offered by some mortgage lenders as a courtesy to their customers who are having financial hardships or difficulty making their mortgage payments. The agreement can be a permanent or temporary fix to the mortgage rate, term, and monthly payments. Loan modifications are to help reduce a borrower’s payment to equal about 31% of their total income. Bottom line, loan modifications are there to help the homeowner avoid foreclosure. True mortgage lenders are trying to help you keep your home.
Whenever there is a circumstance where the borrower may receive financial assistance, remember there are always scammers lurking! Loan Scammers make promises that they will not keep, and they will pretend to have contact with your mortgage lender which they do not! There are many loan modification scams out there, the most important thing you should remember is if you are getting ready to try to get a loan modification, you should always check with your current mortgage lender, and see if you may qualify for a government approved loan modification. They will be your best resource. If you decide to go another route, here are some red flags to look for along with current scams that are going on:
Company wants you to stop paying your current lender, or to transfer your payments to them instead of the lender. It is important to always get approval directly from your mortgage lender before discontinuing any payments to them.
Company Guarantees a loan modification or promises your home will not go into foreclosure. For your information, no company can guarantee that you will get a loan modification before they get all of your information, and cannot stop your home from going into foreclosure. Most government approved agencies will let you know they are there to help you as much as possible to avoid foreclosure, but will not make any promises.
Avoid a company who is charging you counseling fees, requiring fees up front for loan modifications. Be careful of a company who is requiring fees for counsel, or requiring money to do the loan modification. They may even suggest you cut off all communication with lenders, attorneys, etc. Many times these scammers will insist you pay them first, and once you pay them, your house will be out of foreclosure. BEWARE! Sometimes these scammers will take your fee, and say they will get your home refinanced, and instead of doing so, will file bankruptcy under your name to stop your home from going into foreclosure instead of refinancing. While this will stop your home from foreclosing temporarily, your money has been taken by the scam, and the scam artists are gone.
Make sure you know what you are signing, and never sign over your deed. Never sign anything without the approval of your attorney or legal counsel, and make sure you read what you are signing. Many times the scammer will want you to sign documents right away or persuade you to sign over your deed to save your home. Scammers will sometimes trick you to sign documents but you are actually signing over your deed, so make sure you read. Another common scam that has been done is the loan scammer will convince you to sign over your deed, and will allow you stay in your home and rent back, with the assurance you can always buy your home back from them at a later time. However they have no intention to ever sell your home back. What they do is they let you live there for a couple months, and change the new terms so they are impossible for you to pay back, and once you default after a couple months, you are evicted, and the lease is in their name, so now you’ve lost your home, forever.
They say they have a new buyer with better credit. Another scam that is out there, is the loan scammer will offer to find a new buyer if you sign over the deed. What they do, is they rent out the property, and keep the money they are receiving for rent, while your mortgage company is still going through the foreclosure, which at the end you still lost your property, and you’re still responsible for the mortgage left.
Don’t ever Release your information to anyone you don’t know. Never release your information over the phone especially personal or financial information especially if you’ve never worked with the company before. Always contact your current lender to make sure they are approving the 3rd party you are working with if you decide to go that route.
Beware of Fake Government Agencies. There are many legit companies out there, but many times the cons will make their company sound like an approved government agency, for instance “LANP”, or something that sounds professional. A good recommendation would be for homeowners to call the HOPE HOTLINE 1-888-995-HOPE (4673) for more information on making homes affordable programs that are out there. They are there to help you.
Remember, there are many scams out there, and the scam artists are lurking anytime you are calling your mortgage lenders. Above are some of the scams, and tips to look out for so you do not fall victim to this evil crime.
If you have been a victim of a loan scam, you can file a complaint with the (FTC) Federal Trade Commission, 1-877-FTC-HELP (382-4357) and make sure you call your mortgage lender for help.