Don't Become A Victim Of A Loan Modification Scam
Because loan modifications are becoming more common, many scam artists are taking advantage of their popularity to con homeowner into costly schemes and programs that promise loan modification benefits for high fees. If you are a homeowner seeking a loan modification, your best option is to deal directly with your lender or a HUD-approved agency, such as InCharge Debt Solutions. Only lenders can grant loan modifications, so seeking the help of any additional party is unnecessary - and potentially expensive.
Unfortunately, many homeowners don't realize that dealing directly with their lenders is the safe path to loan modifications. Some are lured in by radio and television ads with messages proclaiming "We'll negotiate lower mortgage payments for you!" or roadside signs promising "Guaranteed loan modifications." While these claims sound promising, they are false.
A not-for-profit third party can negotiate lower payments or guarantee loan modification. Mortgage lenders are the gatekeepers of all loan modifications and the borrower must work through them. The only exceptions are nonprofit agencies such as InCharge Debt Solutions, a consumer organization offering HUD-approved housing counseling. They work with lenders to determine loan modification eligibility, but the homeowner seeking the modification must play an active role and remain in contact with their lender throughout the entire process.
What types of Loan Modification Scams are there?
Fee-Based Payment Reduction: The scam artist tells you his company can negotiate a deal with your lender to lower your payments for a fee. You are generally told not to contact your lender, lawyer, or a credit counselor, and to instead let the scam artist handle all the details. Once you pay the fee, the scam artist disappears with your money. Sometimes, the scam artist requires that you make all mortgage payments directly to his company while they negotiates with your lender. In this instance, the scammer may collect a few months of payments before disappearing.
Bait-and-Switch Documents: These highly unscrupulous scam artists deliberately confuse homeowners via documentation. You think you're signing documents for a new loan to make your existing mortgage current. But it's really a scam: What you've actually signed are documents that surrender the title of your house to the scam artist in exchange for a "rescue" loan.
Rent-to-Buy Scheme: These con artists ask you to surrender the title of your home as part of a deal that allows you to remain in your home as a renter, and to buy it back during the next few years. You may be told that surrendering the title will result in a better credit rating, which can help you to secure new financing to prevent the loss of the home. But the terms of these deals are generally extremely onerous and make buying back your home virtually impossible. You lose the home, and the scam artist walks off with all or most of your home's equity. Worse yet, when the new borrower defaults on the loan, you're evicted.
In a variation, the scam artist raises the rent over time to the point that the former homeowner can't afford it. After missing several rent payments, the renter - the former homeowner - is evicted, leaving the "rescuer" free to sell the house.
Don't let scam artists take advantage of you. Get the facts from a nonprofit organization approved by the US Department of Housing and Urban Development (HUD), such as InCharge Debt Solutions. Our certified housing counselors will evaluate your financial situation and find options and resources to help you keep your home. Call toll-free at 877-251-1882 or click here for more information.