Los Angeles Times has three solid recommendations in an article today entitled, “Beware of foreclosure prevention scams.”

Here are the key points:

1. 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.
2. 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.
3. 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.

With mortgage fraud cases up 400 percent from five years ago, the new administration in Washington, D.C., plans to do something about it to protect the increasing amount of vulnerable homeowners who are falling victim to con artists.

ABCNews.com reports today that a renewed effort, which will be spearheaded by the Financial Crimes Enforcement Network, will “ratchet up its efforts to identify fraud suspects for civil and criminal investigation and issue an advisory to help financial firms flag questionable modification schemes for law enforcement.”

This latest initiative opens up a new front on the battle to stem the foreclosure tide.

Already, the administration has implemented the “Making Home Affordable” program to help “underwater” homeowners refinance their mortgages, as well introduced a limited-time $8,000 tax incentive for first-time homebuyers to spark interest in home purchases.

Here is a snip from Treasury Secretary Tim Geithner on this important development:

“Just as this administration has intensified our efforts to help American homeowners, those who would seek to prey on the most vulnerable are intensifying their tactics as well, often through purported mortgage modification and foreclosure relief companies. These are predatory schemes designed to rob Americans of their savings and potentially their homes…. We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will aggressively pursue individuals involved in mortgage rescue scams.”

For more information on how to avoid foreclosure scams and other red flags of which to be aware click here (click on “Five Tips for Avoiding Foreclosure Scams”). In the meantime, if you’re having trouble meeting your monthly mortgage obligations click here. We’ll connect you someone who can help.

Renters in the Lake Ridge development of Cedar Hill, Texas, which is an affluent suburb community just south of Dallas, were living in million-dollar homes for less than $1,000 per month, according to a recent article in the Dallas Morning News.

It sounds too good to be true, right?

Well, it was — wily con artists were found to be behind the scam, renting out foreclosed mini mansions that they didn’t even own to unsuspecting tenants at rock bottom prices. The scammers would then collect the monthly rent payments until the local authorities or homeowners (banks) discovered the illegal activity.

That didn’t stop them from moving on, however, going from house-to-house and tenant-to-tenant in what authorities are describing as an “ingenious” plan to bilk the system.

Here’s a snip from local law enforcement officials:

“It’s so novel. It’s ingenious, really…. You have to have a somewhat sophisticated person to pull this off. There are holes in the system that allows it to be easy.”

Fortunately, it appears that the problem is being addressed now that scam has been uncovered.

In fact, the article indicates that a local pastor is currently being charged with “one count of securing execution of a document by deception in connection with renting a foreclosed home in Cedar Hill.”

Amen.

When a homeowner falls behind on mortgage payments, the reality of a looming foreclosure filing and bank repossession can cause fear and desperation.

During these trying times, it’s not uncommon for some homeowners to make poor, uninformed decisions and fall victim to foreclosure rescue scams.

Unfortunately, once homeowners are in default and foreclosure proceedings begin it becomes a matter of public record. Armed with this information, crooks often approach these distressed homeowners with bogus or misleading assistance that eventually make bad situations worse.

The Boston Herald recently highlighted such a scheme, which is, ripping through Boston’s poorest neighborhoods.

Here’s a snip:

… a cottage industry of shady small-time speculators has sprung up to target these struggling homeowners. One popular tactic: persuading a beleaguered homeowner faced with foreclosure to “temporarily sign over his home in exchange for financial assistance. You can guess the rest. Another ploy: offering to make some phone calls – to pull a few strings – on behalf of the homeowner with the lender. Of course, all that is needed is a few thousand dollars up front.

Fortunately, the new scam has caught the attention of the Attorney General, according to the article. And, the office has brought two rescue scammers to court and is exploring additional cases.

The Massachusetts example detailed above represents a small slice of this nationwide problem. With the increase in foreclosures across the board, state governments and local authorities are finding it harder and harder to crackdown on each and every rescue scam.

It’s critical that homeowners don’t fall into this trap. Therefore, anyone who sends fliers via mail or knocks on front doors talking about quick and harmless bailout offers should be considered suspicious.

And, always remember that viable resources and options do exist to avoid foreclosure. For starters, fill out this form to speak with a reliable professional.

Most important, however, is to remain as level-headed and as cool as possible.

Good help is out there, it’s just a matter of finding it before bad help finds you.