July 15, 2014

Be on the Lookout for Loan-modification Scams

1024px-Sign_of_the_Times-ForeclosureAlthough our nation is coming out of the recession, there are still many of us being affected financially. And unfortunately, there are scammers out there looking to take advantage during a vulnerable time.

Many people are having difficulties keeping up with mortgage payments and are falling victim to loan-modification scams partly because they are unfamiliar with the loan-modification process. If someone were to ask, how much you’d pay for loan-modification or to stop a foreclosure on a home? For many, the answer is ‘anything.’ However, it is actually illegal for businesses to require an upfront fee for mortgage-relief services. Under the FTC’s Mortgage Assistance Relief Services rules, companies must obtain a written offer from a lender that you deem acceptable before charging any fees. Additionally, you should receive paperwork that describes the changes to your current mortgage.

According to NeighborWorks America, Americans have paid around $93.6 million to these scammers, averaging at about $3,287 per household. Many believe that paying up front fees for loan-modification services is the only way to get things done quickly, but this isn’t true. Here are some warning signs that you may be getting scammed:

  • You receive a guarantee that a company will get your loan modified or stop your foreclosure.
  • You are asked to pay a fee before seeing a written offer from a lender.
  • You are asked to stop paying your mortgage, and instead send your money to the company.

For the full story and some background on NeighborWorks America, read the article at Philly.com.