Authorities publish tips to avoid loan modification scams; It’s not just happening here in California!
Trying to get to homeowners before scam artists; FTC and local and state authorities have recently cracked down those that prey on struggling homeowners.
The FTC has produced a video to increase awareness of the problem and to teach struggling homeowners how to avoid scams. As part of its inter-agency crackdow. Dubbed “Operation Loan Lies” the video can be watched and downloaded at www.ftc.gov/YourHome, or below.
For homeowners seeking to lower their monthly home loan payments, here are some tips on avoiding being caught in a scam. The suggestions come from the FTC and the office of California Atty. Gen. Jerry Brown:
- 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. For a referral to a housing counselor near you, contact HUD at (800) 569-4287 or www.hud.gov.
- 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.
A few of the other areas Modification Scams are rampant: