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2011-01-03 17:04:02
Loan Modification Scams

Loan Modification Scams

I am tired of hearing people who are already hurting being taken advantage of by scammers, so I have some information that can help keep people from being scammed. The financial woes of the whole nation have proven that these are unusual and trying times.  In times such as these, scammers come out of the woodwork in large numbers to prey upon the public.  I must acknowledge that not all loan modifications are scams, and not all companies are scammers.  So I want to point out some of the scams that are used so that you can protect yourself from their sales pitches. 

The most common scam involves taking a sizeable up-front fee, anywhere from $700-$7,000 and then never providing any services.

Watch out for those that advertise that they can quarantee results, or make pitches that 'Sound too good to be true.'  They look for people that are desperate and tailor their presentation to appeal to that desperation.

Also watch out for those that tell you not to make your mortgage payments, so that you can pay them their fees.  Generally a few months go by, then a notice of default is filed on the property and then the homeowner doesn't have the money to make their current and past due mortgage payments.

One prevalent loan modification scam involves advertising a phony government bailout program, this generally happens after a notice of default has been filed with the county.  They then send a letter with the impression that it is from a official government agency and that they qualify for this program and all they have to do is send a sizeable fee to the address included.  They then follow it up with a phone call to confirm receipt of the letter and to give the illusion of authenticity.

Another scam is the 'bait and switch', where the company says that you don't qualify for loan modification, but they can do 'alternatives.'  Which range from bankruptcy to quitclaiming the homeowner's interest to a third party.  The scammer then 'lease option' the property, sometimes back to the original owner and then the property generally goes to foreclosure in the end.

 

How can you protect yourself?

1- Make sure the company is licensed with the Utah Division of Real Estate.

2- Talk to your lender.

3- Never make a mortgage payment to a third party.

4- Do not pay upfront fees.

5- Keep making your mortgage payment.

6- Do NOT sign a quit claim deed.

7- Do not sign any documents with blanks, and read every line.

8- If you think you are scammed file a complaint with the Division of Real Estate.

 
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