Los Angeles Times has three solid recommendations in an article today entitled, “Beware of foreclosure prevention scams.”
Here are the key points:
- If the company claims to be able to guarantee success in preventing foreclosure, no matter what your financial situation or mortgage details, don’t listen further to the pitch. Nobody can guarantee you’ll get a loan modification, and nobody can guarantee that your lender won’t pull the plug and foreclose.
- Although there is no federal law against collection of upfront fees for loan modification assistance — unlike so-called credit repair operations, through which fees are prohibited until services are completed — any company asking for $1,000 to $4,000 in advance should be checked out thoroughly by the homeowner before any payment.
- Mortgage modification companies that claim to have special inside connections allowing them to make your payments directly to your lender — provided you send your monthly checks to the modification company, not to your regular servicer — are almost certainly intent on one thing: cashing as many of your checks as possible, pocketing the money and leaving you unprotected and heading for foreclosure.
As of April 6, 2009, the Federal Bureau of Investigation was investigating about 2,100 mortgage fraud cases throughout the nation — a 400 percent increase from five years ago.
That doesn’t mean you shouldn’t explore the options of a possible loan modification with your lender. Just be careful.
And try not to pay any upfront money to a third-party company with an official-sounding name when you may not have to. Especially because there are free government programs such as “Making Home Affordable” that offer housing counselors and other helpful support at no cost.
To check and see if you are eligible for a loan modification use this self-assessment tool right here.
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September 15, 2009 at 11:42 am
Jonathan Strength
I have been unemployed from the real estate marketing field for almost a year and a month. I have exhausted all of my savings and 401k, and am now left with nothing but what little bit of unemployment I received each week. I have been actively seeking work ever since being laid off from my job, and finally, out of desperation, accepted a job that would initially pay for two weeks of training via a temp agency, at which point the temp agency would stop payment, and I would go to commission-only with the said company.
During the second and final week of training (which, by the way, was “for [me] to see if the job is a fit for [me] and the company”), I realized this was not a position in which my financial situation I could afford to take. Virtually no one was coming in the retail establishment, and additionally, as I learned more about the way the company worked, I realized to start my own business (which is what I’d have to do) would cost more than I could afford. At that point, I informed the employer that the position was not a fit for me, thanked them, etc., etc.
The next thing I know, my employment benefits stopped. I learned that the temp agency had flagged me as “hired,” even though the payment from them was for the two weeks of training only, and for that specific position. Now I have no benefits whatsoever, and am at a complete loss as to what to do next.
I am behind on my mortgage loan payment, and even though I have been set up on a three-month deferral, I am wondering how I’m going to make even the minimum due at the first of the month. Does anyone have a recommendation on a company that would be able to help with a mortgage rate loan modification or refinance of some sort in my situation? I’ve been given the name of one particular site, http://www.help4homeowers.com, which I’ve heard is a reputable company. Before taking any action or contacting any certain company, do any of you have any suggestions, similar stories, or information that may help?
Thank you!
Jonathan
September 18, 2009 at 12:05 am
Mike Rausa
It’s unbelievable how much fraud took place during the real estate boom. Many of my clients are struggling to get back on their feet from the real estate downturn.