I find myself writing a lot about this subject because it pisses me off and totally ruins my day. It seems like everyday I hear of another scumbag taking advantage of someone trying to modify their home loan.
Loan modification scams happen left and right everywhere, even at the local level right here in San Diego. If you are looking for someone who can help with a loan modification, don’t take for granted the fact that there are a lot of people who take advantage of your need for their own benefit. It is therefore a necessity to know what the signs of loan modification scams are so you can guard yourself against them.
Homeowners trying to get their mortgage payment lowered or fixed are usually having a difficult time meeting their monthly payments. They often find it a problem to ask for help and advice from other people. This makes them extremely vulnerable to these loan modification scumbags. These scumbags can approach you easily through misleading marketing efforts and many other means. After all, lenders publish notices at the 90 day delinquency period which is public information. This gives the scumbags their very own hit list. So what should you watch out for to determine if you are being scammed?
Requests for instant fees. The objective of scammers is to get your money. It is only natural that the first thing they ask for is payment for services they have promised but have yet to deliver. There are small fees that are normally required in housing counselling, but if your foreclosure consultant starts asking for payments by the thousands, this is one sign for you especially if no work has been done yet.
Promises and guarantees. A loan modification is a tricky task and legitimate foreclosure counsellors know this. So they often refrain from giving guarantees. Solid guarantees and the strongest of promises often say exactly the opposite. So when you start hearing unrealistic promises, start looking for another consultant.
Cutting off communication. Foreclosure scumbags may tell you to stop communicating with your lender. However, regardless of whether you are working with a foreclosure consultant, you should still communicate with your lender. In fact, your lender should be your first source of help when you are looking for a revised payment plan.
Requests for title transfers. This is the WORST! Some scumbags ask you to transfer the title of your home to them. In exchange, they will make your mortgage payment. Then they will allow you to stay in your home as renters. However, this means they have the power to increase your rental fee, sell the house to someone else and keep the payments, or even evict you. The majority of scumbags transfer title of the property to some LLC or other bogus entity, offer you a rent to own option, collect your rent and never make a payment. By the time you find out what is going on because they tell you not to talk to the bank, they have collected thousands of dollars, possibly 12-18 months worth of rent and never make 1 payment!
Incomplete contracts. Contracts that are not complete, filled out properly, or not clear are scumbag warning signs, too. Never sign contracts that you have not read or don’t understand. Also, beware when your consultant somewhat pressures you into signing a contract. Do not hesitate to ask questions. Loan modification scams are happening in San Diego by the minute and many other parts of the country. Legitimate foreclosure consultants would be willing to answer all your questions.
If you have any questions or concerns, you can always ask for help. Below is a link to a list of HUD approved housing and counseling agencies. If your in San Diego, you will be able to find several options for local agencies that may be able to provide some assistance. If you are ever in doubt, ask for help, get 2-3 opinions!
– HUD Approved Housing Counseling Agencies
– California Department of Real Estate “NO OBJECTION” Approved Loan Modification Brokers – use caution, even though these companies are approved, they still could be scumbags!
– Our main article on mortgage scams