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How To Spot A Loan Modification Scam

Sat, Sep. 24, 2016 Posted: 10:44 AM


Homeowners who are unable to afford to pay the current terms of their loans can choose to apply for a loan modification. There has been an increase in the past few years of the number of homeowners who have applied for a loan modification and there has also been a growing number of individuals who have attempted to scam those who are seeking loan modifications. These individuals will often appear after they have discovered that a homeowner is facing a foreclosure by looking at foreclosure notices in newspapers and by looking at public files. Those facing foreclosure should pay attention to the warning signs of a foreclosure scam.

Scam Artists Often Have Very Official-Looking Documents

Those facing foreclosure should always carefully scrutinize all correspondences. Scam artists will often work very hard to make sure that their correspondences look official. When in doubt, it is best to consult with a lawyer when determining the legitimacy of a correspondence.

Scam Artists Make Bold, Unsubstantiated Claims

There are many claims that a scam artist will make in an effort to place the mind of the potential victim at ease. For instance, he or she might claim that the company is attorney-backed. The scam artist may claim that he or she has been in business for 10 to 20 years. The representative may promise a money-back guarantee and may also claim that their company has helped thousands of homeowners. All of these claims can be made without solid evidence to back them.

They May Try To Pose As An Official Government Agency

If you notice that an individual appears to be affiliated with a reputable government organization, scrutinize the evidence that he or she is affiliated with this organization. For instance, if the individual is apparently affiliated with a government website, make sure that the website has the appropriate top-level domain. This is the .com, .gov, .edu extension found on the domain name. HUD.com is not likely to be a government website, while HUD.gov is a legitimate website affiliated with the U.S. government. While legitimate organizations may also make these claims, the claims are not proof that the organization can be trusted.

Warning Signs Of A Scam

There are many warning signs that an organization is attempting to scam you. The company may ask for a fee before working with you. They may promise that they can stop the foreclosure. They may ask you to stop paying your mortgage and send the money to them instead. You may be pressured to sign over the deed to your home. You may be asked to provide them with personal finance information online or over the phone. These are all actions often carried out by scam artists, but would not be carried out by a legal, legitimate business.

Illegitimate companies will often operate out of state. They will not have a license with the DFI or may have a fake license. Or, the company may claim that they do not have a license because they are working with attorneys. The attorneys they work with may be out of state and not licensed to practice within the state you are residing in to assist in offering loan modifications.

FTC Is Cracking Down

The good news is that the FTC is cracking down on those who engage in loan modification scams. The FTC is also working with nonprofit organizations to reach out to those who may be distressed when struggling to pay their mortgages. Warning letters have been sent to 71 companies that are advertising through the Internet with the warning that they may be engaging in deceptive advertising.

Rob williams