The following is an abridged FARM letter version of the original article. For the full article, please click here.

As mortgage delinquencies remain somewhat out of control, those looking to capitalize on California’s 2,500,000 struggling underwater homeowners are emerging from the woodworks. They hold in their hands a promise many have been waiting for: to prevent home foreclosure. However, behind their sweet-tasting words is a serpent’s tongue casting about for financially wounded homeowners’ money.

Be wary of anybody who promises to be an “expert” in foreclosure prevention – or short sales for that matter. This is not to say in any way that all claiming to be experts have ill intentions, but rather a call to keep your eyes open for the obvious warning signs:

  • Request for upfront fees:
  • Guarantees to prevent your foreclosure:
  • Instructions to stop paying your mortgage, and instead pay them for their services:

Those individuals advertising as short sale experts are occasionally using this front as a guise for attracting desperate homeowners, then pulling a bait-and-switch routine and taking on the role of a foreclosure prevention specialist.

Loan modifications should be pursued only by the homeowner.  The United States Department of Housing and Urban Development (HUD) has free advisors that actually give advice on what your options are. [For a list of nonprofit housing counseling agencies approved by HUD, visit HUD’s counseling agency page at (//portal.hud.gov/portal/page/portal/HUD/i_want_to/talk_to_a_housing_counselor)  or call (800) 569-4287.]

Any scammers who demand money upfront are obviously not confident in their “guarantee” or else they wouldn’t mind being paid upon delivering a desirable result.

Insisting you stop paying your mortgage may be sound advice, however, if you decide to take that route you need to pocket that money yourself, saving it for a future down payment instead of giving it to someone else.