Loan-Modification Scams are on the Rise

by San Antonio Attorney

Despite the economy and unemployment rate getting better, there are still many people in America who need financial assistance, particularly with their home mortgages. These homeowners are often vulnerable to loan-modification scammers.

According to NeighborWorks America, loan-modification frauds have been continually increasing. And they generally work because homeowners are not familiar with the process.

Many homeowners are willing to pay to get a loan modification because they want to avoid foreclosure. But the truth is it is against the law for a company to collect upfront payment for mortgage-relief services.

The Federal Trade Commission’s Mortgage Assistance Relief Services says that companies offering loan-modification services and mortgage foreclosure relief are forbidden from collecting payments until they have furnished a written offer from a servicer or lender that the homeowner finds acceptable. It is also required to provide the homeowner a written document from the servicer or lender explaining the important modifications to the mortgage that would take effect if they agreed on the offer.

The reason why homeowners are willing to pay is because of the television and radio advertising for mortgage-modification services and foreclosure relief. The companies know that a great number of homeowners are still not receiving help from the state and federal programs intended to accelerate mortgage refinancing and modifications.

Scammers usually watch out for homeowners who are in one of these situations:

1. Falling behind on their home loan and would like to find out if they are eligible for a loan modification.

2. Current on mortgage payments but unsure whether they can keep it up.

3. Able to pay the mortgages, but their loan balance is more than the current value of their home. They want to make the most of reduced mortgage rates and are worried that they cannot avail them.

Leave a Comment

Previous post:

Next post: