They Are Out There: Mortgage Modification Scams

They Are Out There: Mortgage Modification Scams

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One of the unfortunate fall outs of the collapsing sub-prime mortgage market is that some homeowners are getting scammed when they seek out so-called mortgage modification schemes.

Be careful about turning your home over to a third party when modifying your current home loan.

Be careful about turning your home over to a third party when modifying your current home loan.

According to a recent article which appeared in the Baltimore Sun, some people are being taken in by companies and individuals who are marketing mortgages with the word “hope” in their title. It seems that these scammers are trying to confuse homeowners into thinking that they are part of the “Hope Now” partnership between HUD (Housing and Urban Development) and community and business groups when they are not. Instead of getting a federal government approved loan, they’re getting hooked by a company who isn’t looking out for their best interests.

Promises made by these companies includes telling homeowners that their mortgage modification terms will be modified which would lower monthly payments. Instead, rates aren’t always lowered or stiff fees are assessed, both of which can cause people to lose their homes.

Scammers And Their Deeds

Many states do not allow up front fees for modifying home loans which can equal the cost of a monthly mortgage payment. Scammers purport to have an unusually high success rate (as high as 95% according to the newspaper) which entices desperate homeowners to sign on. Where states prohibit up front fees, illegitimate operators will often assess a monthly installment payment for services rendered (or not).

If you’re having financial difficulties and are trying to keep your home from being foreclosed, you need to keep your head on your shoulder by carefully exploring your options before deciding what course of action that you should take. Specifically, you may want to:

Read up on local laws – Some states prohibit up front fees while other states limit who can take on the role of mortgage counselor or modifier. Call your county courthouse or state government to learn who oversees lenders in your area; report any strange schemes to them.

Vet mortgage modification companies – Not all modification companies are running scams, but some will pressure you into signing a legitimate contract by telling you not to talk with your current mortgage lender. That’s a big mistake – you ALWAYS want to keep your mortgage company in the loop as they’ll have final say as to whether your house will go to foreclosure or not.

Use an attorney – Never sign a contract that hasn’t been checked by an attorney first. Scammers will sometimes have homeowners sign blank pieces of paper and then fill in the details later. You just may end up signing over ownership to your home to a third party!

Think things through – Working on your tattered emotions, avoid those companies who guarantee you that your home won’t be repossessed. Your mortgage agreement and local laws are the best indicator as to where you stand if you don’t make payments.

Unfortunately, scammers are still working to con people, but they need not be successful in their efforts. If you suspect a scam in progress, call the police. Once you’ve signed the contract, you may find it difficult if not impossible to cancel a binding legal agreement, even an ill gotten one at that.

Adv. – If you are a first time homeowner, don’t forget that the federal government is giving to you an $8000 buying credit good through November 30, 2009. For more information about buying a home, finding a mortgage or refinancing, please visit SayLending.com.

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