Mortgage Scams: How To Avoid Them

Mortgage Scams have been on the headlines of the news as the nationwide raid on mortgage consultants arrested high profile loan modification consultants and firms. This has created a panic among homeowners that need a loan modification creating insecurity among those that need the most help.

In response to this situation the Federal Trade Commission has teamed with local and state authorities in a nationwide crackdown on conmen consultants and loan adjustment scams.

The biggest challenge authorities have is actually reaching the people at risk from these scams before the scammers knock on their door and dupe them to pay for services and loan adjustments they never provide.

One avenue the Federal Trade Commission (FTC) and local authorities have embraced is providing videos under the theme “Real People, Real Stories” in Spanish and English. See at www.ftc.gov/YourHome.

These videos illustrate the steps homeowners can take to either save their home from foreclosure or save on their monthly payments without being taken for a ride by unscrupulous “consultants”

The FTC and the California Attorney General’s office has also put together a list of tips of how to avoid scams here is an excerpt from the the release that is worth reading:
• The first thing anyone seeking to modify an existing loan should do is call his lender.

• Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant. Do not ignore letters from your lender. Many lenders are willing to work with homeowners who are behind on their payments.

• Contact housing counselors approved by the U.S. Department of Housing and Urban Development, who may be able to help you for free.

• It is illegal for foreclosure consultants to demand money before they give you a written contract and before they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.

• However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the California Department of Real Estate for review.

• Do not transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later.

• Fraudulent foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. Beware — this is a common scheme so-called rescuers use to evict homeowners and steal all or most of the home’s equity.

• Do not pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• Do not sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer” who is actually a scammer.