With the government and major lenders stepping up their loan modification efforts, a new industry is building up—home loan modification scams. Often posing as third-party firms offering mortgage aid, these companies prey on desperate borrowers and charge them for poor or nonexistent services. State laws have been put in place to protect borrowers from home loan modification scams, but part of the responsibility also rests on the homeowner. To help you keep safe, here are some ways you can pick out home loan modification scams from legitimate companies.
Most home loan modification scams work by charging you a sizable fee, then doing substandard work or even just letting your case go. Governments have addressed this by banning upfront fees from all loan modification transactions. If a company asks you to pay before they do anything, it’s most likely a home loan modification scam.
One thing you should know about loan modification is that there are no guaranteed results. Companies that promise to save your home without even knowing your name are probably home loan modification scams. A legitimate loan modification firm will ask for documents and analyze your situation before making any promises.
A number of home loan modification scams have been known to get borrowers to sign their homes over, stop paying their mortgage, or sign forms without filling them out. Some even tell their victims to avoid all contact with their lenders. Every time a firm asks you to do something you’re not sure about, don’t be afraid to ask why.
Companies who are after your money will most likely use strong words to scare you into working with them. They may use the word “foreclosure” or mention living on the street more often than necessary. Have a clear idea of where you stand and don’t let them make it seem worse than it actually is.
Limited contact information
The first thing you want in a loan modification company is that they be available when you need them. Most home loan modification scams will do the opposite—they’ll be out of touch as soon as they have your money or your signature. Make sure they have a real office and phone number, or better yet, look them up at the Better Business Bureau (BBB) website to see if they’re legitimate.