BEWARE! SCAMMERS are out there in full force. It’s easy to be fooled, so the best thing you can do is CONTACT YOUR OWN LENDER if you need assistance in trying to obtain a loan modification.
I found this on the Internet and wanted to pass this along to you. Because loan modifications are changing every day. Here are some of the most common loan modification scams out there today.
Phony Counseling or Foreclosure Rescue Scams
The scam artist poses as a counselor and tells you he can negotiate a deal with your lender to save your house—if you pay him a fee first. He may even tell you not to contact your lender, lawyer or housing counselor—that he’ll handle all details. He may even insist that you make all mortgage payments directly to him while he negotiates with the lender. Once you pay the fee, or a few mortgage payments, the scammer disappears with your money.
Short Sales and Foreclosure 101
Fake “Government” Modification Programs
Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, up-front fees to qualify for government mortgage modification programs. The scammer’s company name and Web site may sound like a real government agency. You may also see terms like “federal,” “TARP” or other words related to official U.S. government programs.
TIP: Your lender will be able to tell you if you qualify for any government programs to prevent foreclosure. And you do not have to pay to benefit from these programs.
Bait-and-Switch
The scam artist convinces you to sign documents for a “new loan modification” that will make your existing mortgage current. This is a trick. You actually just signed documents that surrender the title of your house to the scam artist in exchange for a “rescue” loan. In other words, you just handed over your house to a Scam Artist.
Rent-to-Own or Leaseback Scheme
A scammer urges you to surrender the title of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. He may tell you that surrendering the title will permit a borrower with a better credit rating to get new financing—and keep you from losing your home. However, the scammer may have no intention of ever selling the home back to you.
But the terms of these deals usually make buying back your home impossible. Worse yet, when the new borrower defaults on the loan, you’re evicted.
Variations:
1. The scammer raises your rent over time to the point that you can’t afford it. After missing several rent payments, you are evicted, leaving the “rescuer” free to sell your house.
2. The scammer offers to find a buyer for your home, but only if you sign over the deed and move out. The scammer promises to pay you some of the profit when the home sells. But the scammer simply rents out your home and keeps the profits while your lender proceeds with the foreclosure. You lose your home and are still responsible for the unpaid mortgage, because transferring the deed does not affect your mortgage obligation.
Bankruptcy to Avoid Foreclosure
The scammer may promise to negotiate with your lender or get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, he pockets the fee and files a bankruptcy case in your name—sometimes without your knowledge.
TIP: A bankruptcy filing often stops a home foreclosure, but only temporarily. Filing bankruptcy stops any collection and foreclosure while the bankruptcy court administers the case. But, eventually you must start paying your mortgage, or the lender will be able to foreclose.
You could lose the money you paid to the scammer and your home. Worse yet, a bankruptcy stays on your credit report for 10 years, which makes it difficult to obtain credit, buy a home, get life insurance or even get a job.
Click here to learn more about the Hidden Treasure that is in your home (Taxes)
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Brought to You By Your Favorite Realtor,
Nancy Hankin
www.PalmSpringsHomesAndEstates.com
Gerald:
Thanks for the helpful information.
I thought this was a GREAT article! People should know about the types of scams that are out there. Unfortunately, there are always going to be people out here who try to take advantage of other people’s misfortune. Having said that though, believe it or not, there are firms out there who actually are trying to do some good. It just so happens that they charge a fee for their service. They do this much in the same way as you would hire an accountant to do your taxes or an attorney to file your bankruptcy. (And we all know some less than reputable accountants and lawyers out there!) Keep in mind that a loan modification – whether through HAMP or traditional can only be done through your lender. Under HAMP, there is no negotiation. You either qualify or you don’t. Traditional mods can be negotiated based on lender guidelines. In either case, sometimes the lender is just unwilling to help homeowners. In those scenarios it may be prudent to get third party help. If you do so, here are some things to keep in mind:
1. If it a law firm or mod company, be sure they are licensed and check with the state they are registered in to see how long they have been operating. you can also sometimes check with the Attorney General’s office or the Dept. of Treasury to make sure they are a legitimate business. They may also be able to tell you if there are any complaints in that state against them.
2. Try to use a company that does document preparation. It usually will cost you less because they just prepare the paperwork. They leave contacting the lender up to you. If you do go with a mod company or attorney, make sure that everything they do is transparent. And just as in the article – DO NOT PAY THEM INSTEAD OF YOUR LENDER!
3. If you feel you qualify for HAMP, educate yourself on the program guidelines. http://www.makinghomeaffordable.gov or http://www.hmpadmin.com.
What is important to understand is that the decision to do a modification is not an emotional one – even though for many of us, our circumstances make it emotional. After all, the program is based on hardship. However, it is a financially motivated decistion. What makes sound financial sende for the lender? More often than not, the decision comes down to your paperwork – more specifically – your financial worksheet. If your worksheet does not meet lender quidelines, chances are you will not get your modifiation.
Bottom line: go to your lender first, see if they will assist you. If not NACA (Neighborhood Assistance Corporation of America, http://www.NACA.com) and HUD (US Department of Housing and Urban Development, http://www.hud.gov) are great free resources that may be able to assist. If not, it’s ok to pay someone to help, just do your homework.