March 11th, 2009
The New Breed of Mortgage Scams
Remember when you used to have several different mortgage companies calling repeatedly to see if they could help you with a mortgage refinance? Those days are long gone, and have been replaced by a new breed of mortgage scams. Loan modification companies are now reaching out to consumers to offer their services in reducing the amount owed to the lenders. They offer to reduce the payments owed to the mortgage company in exchange for an up-front fee, typically $1,500-$2,000. Unfortunately, a vast majority of these companies are fraudulent and after they collect their fee, they disappear with your money.
Mortgage companies are having trouble keeping up with the demand of borrowers trying to modify their loans, and will continue to be overwhelmed due to Obama’s new Keeping Home Affordable plan. There are free non-profit counseling agencies, but they can’t keep up with the volume either. This is where the fraudulent loan modification companies step in. Comprised mainly of former mortgage brokers or real estate agents, these companies prey on the naiveté of those who are in need and in danger of losing their home.
There are loan modification companies that are legitimate, but do your research on them before handing over any payment to them. Ask for references, check for licensing, and even ask some lenders if they have any experience with the company in question. If you don’t feel comfortable with the situation, walk away. Remember, reputable loan modification companies will not require you to pay money up front. This type of con is becoming more common; the Better Business Bureau has been deluded with complaints and is now reporting on these companies and even shutting fraudulent loan modification companies down.
This type of scam is relatively new to the scene and as such, very few people have been prosecuted because it is seen as a misdemeanor crime. Civil lawsuits are possible but also time consuming and costly for the victim. With little legal repercussions, these loan modification scams are becoming more prevalent, but the public is now becoming more aware. If at all possible, work directly with your lender. It may be more time consuming and stressful, but not as stressful as being scammed out of your hard earned money.
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My advice would be if you receive a call offering a service don’t trust it. Especially if requiring money up front.
If a business is successful why call me, be visible and there so I can find it when and if i’m looking.