Fewer things are worse than taking advantage of someone losing their home. This is precisely what mortgage loan modification scams are doing at the worst time in the foreclosure crisis. Perhaps worst of all, most of those targeted are minorities, bringing an even more sinister edge to what’s already a heinous crime.
HOW LOAN MODIFICATION SCAMS WORK
First you’ll get a call telling you how to renegotiate the terms of your home loan. Often times, you’ll be promised or strongly led to believe you will get a modification of loan terms and a lowered principle. You’ll also be asked to cough up around $3,000 to make it happen.
Telling the modification company you aren’t interested won’t get them to stop–they’ll keep calling, lowering the cost of services and promising more and more. Finally, you give in, pay half what they originally asked for and wait for… nothing.
GET OUT OF DEBT?
The loan modification scams work around the idea that there are problems with your original mortgage. The company offers to audit your mortgage.
This is fair enough. Most mortgage audits reveal some problems that aren’t mortgage fraud on the level of the robo signing scandal, but should get some attention. Unfortunately for you, this almost never leads to a reduction in principle or a substantial renegotiation of the terms of your loan.
MORTGAGE FRAUD AND THE FORECLOSURE CRISIS
Sad as it might be, the foreclosure crisis has been a booming industry for less-than-ethical businesses. It seems not a week goes by without hearing about the continued robo signing scandal or a bank foreclosing on a family current with mortgage payments.
The loan modification scams are merely the latest attempt by unscrupulous businesses to turn a profit on people’s misery during the foreclosure crisis.
FIGHTING LOAN MODIFICATION SCAMS
Many people are not taking being targeted lying down, however.
Jose Chirino, the subject of a Daily Finance article, contacted a non-profit legal aid agency specializing in mortgage law. Such non-profits have begun aiding consumers in their fight against loan modification scams and mortgage fraud.
The robo signing scandal has sent a clear message to consumers: Know your rights and mount a fight. Homeowners wishing to get out of debt during the foreclosure crisis have a number of legitimate debt consolidation and debt management agencies to appeal to.
HALLMARKS OF LOAN MODIFICATION SCAMS
There are some clear indications of a loan modification scam. Avoid any company that:
- Guarantees results of any kind.
- Urges you to stop making payments on your mortgage.
- Pressures you to sign contracts or puts a deadline on how long you have to sign.
- Demands a fee up front for services rendered.
Most legitimate loan modification companies are non-profit enterprises who exist for no other purpose than to help consumers like yourself get out of debt. When someone seems more interested in getting their hand in your wallet than helping you deal with mounting debt, contact the Federal Trade Commission.
Those looking for legitimate help with a mortgage should contact the FTC or the Department of Housing and Urban Development. Either can direct you toward reputable services, often at low or no cost.