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How To Spot A Loan Modification Scam Before You Are A Victim Of It.

by Andrew on February 6, 2010

The media has been rife with horror stories of scam artists preying on one of the most vulnerable sectors of our population, troubled homeowners and their families. However, many homeowners just haven’t got the message so we shall revise a few of the signs that can help us spot a loan modification scammer.

These leeches of society will ask for exorbitant fees from homeowners too worried or clueless to see they are paying a thief for something they could do for free.

It must be said beforehand that, as in so many other industries, the many pay for the sins of the few, and that most loan modification agents are just trying to make a decent living providing a service.

Scam Alert 1. Charging Upfront Fees.

It is illegal in many states to charge upfront fees, or fees for services that have not been provided yet. Even for states where it is not illegal it is certainly a clear sign you are dealing with a potential scammer. Stay well away from any company that tries to charge you with upfront fees.

Scam Alert 2. They Guarantee They Can Stop Your Mortgage From Foreclosing.

This is another red flag for loan modification companies you don’t want to touch with a seven foot pole. Nobody can guarantee a servicer will provide a loan modification and stop a mortgage from foreclosing. Not even the Government has been successful at forcing servicers do that, it is unlikely your loan modification company downtown is going to be able to.

The truth is that there are free loan modification counseling agencies that will provide you with all the information you need. We are used to paying for a good service and feel that the free option must be in some way of inferior quality than HAMP counselors. These counselors are not volunteers working out of charity; they are paid by the Government, just not by you.

Scam Alert 3. They Ask You To Stop Paying Your Lender And Start Paying Them.

It is amazing that anybody would fall for this, but we do. The companies will claim that you need to be behind in your payments in order to qualify for a certain loan modification or that they will take care of the payments or any other kind of bogus explanation. Don’t believe it. You do not need to be behind in your payments to get a loan modification you just need to have proof that you can’t afford the current payments. Work on your hardship affidavit, but whatever you do don’t stop making payments. It will only make things worse by further dropping your credit rating.

What Should You Do?

Your best option is to call your state’s HOPE hotline at 877-462-7555 and ask for your closest nonprofit housing counselor or check it out yourself here.

Loan Modification Companies will tell you that you need their help to fill in forms and that nonprofit counselors don’t have your interests in mind like they do. It can be faster and easier to use a loan modification company if you can afford it. Just be careful you don’t become another mortgage modification scam statistic.

Last 3 posts by Andrew

Related posts:

  1. Top 5 Steps to Avoid Foreclosure without Falling Into a Loan Modification Scam
  2. Loan Modification Scams And The Law, A Brief Overview
  3. How not to be a victim of foreclosure fraud
  4. Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.
  5. Loan Modification Scams: Oregon AG Comes To The Rescue

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  • careforthepeople
    NOT THAT YOU SHOULD CARE. BUT SOME OF WHAT YOU SAY IS TRUE AND HOPE IS NOT THE WAY TO GO. CALL A LAWYER YOU CAN TRUST! THE GOV. MOD CO'S. AND ANYONE ELSE CAN JUST BUY TIME, THAT'S THE MOST OF IT. DON'T EXPECT PRINCIPAL REDUCTIONS OR SOME MIRACLES IN THIS PROCESS. ALL LOANS HAVE SOME SORT OF VIOLATION BOTTOM LINE. THE PROBLEM LENDERS ARE BECOMING BOLD AND DISREGARDING THAT UNLESS YOU SUE THEM. ALSO, THESE GREAT JUDGES ARE RELEASE THE HOLD ON FORECLOSURE DURING THE LAWSUIT SO THEY CAN FORECLOSE THUS MAKING THE ONLY OPTION TO FILE BANKRUPTCY.!!! ANOTHER ITEM IS THAT SHORT SALES ARE JUST AS BAD AS FORECLOSURES PEOPLE@@@! WAKE UP AND READ, DON'T LISTEN TO THAT REALTOR HE JUST WANTS TO MAKE COMMISSION. IF YOU WANT TO STAY LONGER RENT FREE, THIS IS THE WAY TO GO! IT SEEMS PEOPLE ARE FED UP WITH NO HELP LAYOFFS AND LIES, WITH ALL THIS MESS. NO ONE IS KEEPING BANKS RESPONSIBLE ANYMORE NOW THAT THEY PAID THE TARP MONEY BACK. THESE ARTICLES NEED TO START REFLECTING SOME TRUTH!!! HOW ABOUT BANKS AREN'T HELPING ANYONE OUT, CAN ANYONE HEAR ME!!!! FEW AND FAR BETWEEN!!!! DOES ANYONE CARE. WE TALK ABOUT SCAMS LOAN MODS, FORECLOSURE SPEC. WHAT ABOUT BANKS CANCELING YOUR LOAN MOD FOR NOW REASONS AT ALL, NO JUSTICE FOR THEM JUST BOLOGNA.. COUNTRYWIDE CEO, GOT INDICTED? WHAT HAPPENED, CASE WAS DISMISSED!! REPORT THAT, WE CAN'T BECAUSE IF YOU DO, YOU WILL BE SHUT OFF, NO ONE IS TELLING THE TRUTH AND IT WILL STAY THAT WAY!! TIRED OF SEEING THESE LIES GOING UNCHALLENGED, ONE DAY REPORT SOMETHING THAT IS HELPFUL NOT, SCAMS, TELL PEOPLE SUE YOUR LENDER, DO YOUR AUDITS, AND TALK TO PEOPLE THAT HAVE GONE THRU WHAT I AM SPEAKING OF.!!! THAT'S INFORMATIVE. YOU TOLD PEOPLE ABOUT THE SCAM::: GREAT, WHAT'S THE SOLUTION, COME ON. I HAVE HAD MANY CLIENTS THAT ARE DRE APPROVED MOD CO.'S GET AROUND THIS WITH NO PROB. DID YOU REPORT THAT? WHY NOT, CHECK INTO IT, REPORT THAT, HELP THE CONSUMER DON'T JUST TELL THEM SOMETHING THEY HAVE ALREADY HEARD. THIS IS POSTED ALL OVER THE DRE WEB SITE OF WHAT YOU ARE SPEAKING OF.!!!! REMEMBER WHAT I SAY!!!!!!!
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