Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.

Desperation is not the best state of mind to make good financial decisions. Loan Modifications are no exception. The situation of many homeowners is becoming so desperate many will jump on to pretty much any scheme they feel has a chance of saving their home whatever the consequences.

This of course is perfect breeding ground for the scum of finance, con artists that prey on desperate homeowners to dupe them from their hard earned cash and only worsen their sad situation.

Mimic and camouflage
One of the methods these companies use is to mimic the advertising and appearance of government schemes that are designed to help homeowners. For instance loan modification companies will include the word “HOPE” in order to mimic the name of the Obama Administration’s mortgage aid program.

These organizations will also advertize themselves as licensed public service offices. This way they camouflage themselves as nonprofit organizations when they are not. In order to do this they will open their radio and tv adverts with claims of being a public service. This form of camouflage is very effective. Often when loan modification companies cold call private homes the homeowners think they are speaking with a federal institution or a nonprofit organization and speak to them as such. This creates conflicts of interest where the loan modification companies without scruples can take advantage of.

Promises, promises
Another technique of loan modification scams is to promise the moon and deliver nothing. Consumers are promised incredible loan terms that end being just that, incredible. Of course before the outrageous claims of low mortgage interest rates and reduced monthly payments are seen for what they are homeowners often pay high fees for which they get little if anything in return. Sadly they often lose their homes.

The number of loan modification scams is surprising.Since February the FTC has filed 19 cases of mortgage and loan modification scams. The specific scams change from claim to claim but the basics are the same. Outrageous claims of loan modification success rate, sometimes of 95% and more.
These companies will exact their fees from monthly installments from the homeowners or as an upfront payment equal the mortgage payments of one month. In many States, like Maryland, this is actually illegal.

Loan modification schemes adapt to the times and the news. Whatever is new and exciting in the loan modification industry is good bait for the next scam. For instance the new federal Home Affordable Modification Program has had plenty of airtime, loan modification companies will use words and expressions that attach them to these programs and that way some of the interest and trust generated by the government is transferred to the loan modification company.