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.
Scam artists are growing rich on unsuspecting homeowners searching for hope. 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:
As soon as these guys wrap their fingers around your cash, they pocket it and move on to the next victim as they answer your future concerns with lies and promises that they are “working on it.”
- Guarantees to prevent your foreclosure:
It is impossible to guarantee such a thing, especially before the “specialist” knows anything about an individual homeowner’s situation.
- Instructions to stop paying your mortgage, and instead pay them for their services:
The strategy employed here tries to milk a homeowner for as much as possible before the property is inevitably foreclosed upon.
first tuesday take: Warn negative-equity clients to avoid scammers like these. 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. [For more information on scams that seek to prey on insolvent homeowner’s, see the March 2010 first tuesday article, Loan modification scams continue under a new name: loan audits.]
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 Talk to a Housing Counselor page, 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. A contingency fee, due upon closing a deal, is a tradition in the real estate brokerage business which has essentially banned the practice of using advance fees.
Insisting you stop paying your mortgage may be sound advice, however, if a homeowner decides to take that route they need to pocket that money themselves, saving it for a future down payment instead of giving it to someone else.
Re: Avoid foreclosure-prevention scams: 3 tips from CNNMoney.com
we are currently looking for help with our mortgage. we are almost 3 months behind with a threat of forclosure on dec. 2. wondering if you can help ………. please call thomas at 480-699-0806. thanks thomas
My company is a loan modification education and marketing company. We are not a loan modification company, nor are we a foreclosure consultant. We provide distressed homeowners across the country with resources, knowledge, assistance and access to a network of professional organizations specializing in protecting homeowners.
I have to admit I was somewhat frustrated reading this article, as its all too commonplace. Loan modification companies have been tainted as a result of dishonest companies taking advantage of people. The general public frequently hears news and headlines warning them not to pay anyone for this service as some are scams. This is what we are up against. Nonetheless, we are advocators of do-it-yourself loan mods, since we provide the education and coaching to perform a do it yourself mod, nonetheless the reality is that there are circumstances in which a homeowner may need or find it beneficial to pay for professional assistance.
I see nothing wrong with charging up front fees as long as work is being completed or payments are based on completion of phases. What needs to be pointed out here is that these folks are in foreclosure, as such they have lost their credit worthiness. If you are to wait until the service is complete and there is not an escrow or trust account to ensure that the fee is paid and secure, you may end up becoming a collection agency rather than a loss mitigation company.
More recently, news headlines proclaim that the federal programs aren’t working well and the lenders are not responding. Foreclosures continue. Where should a borrower turn now? Again, this proves that it’s beneficial to involve a professional.
Over the past couple years we’ve dealt with many loan mod companies and most are not good. As professionals, we were victims ourselves to being ripped off. As a result, we’ve done the time consuming and painstaking due diligence for the client.
We are a solution and customer service-based organization. Our intention is to work ethically and in the best interest of the client, to help them in their time of need.
We always collect documents to review clients cases to determine feasibility. As such, we do an initial risk-free underwrite of their file, as it’s not to the clients’ benefit nor our benefit to work on files that we don’t have a good shot at; it will waste the clients time and money, and we may not be able to earn our fee. This dramatically increases our chances of success and we’re left with happy clients instead of clients with more problems than when they are started.
Our executive team is comprised of professionals with more than three decades of real estate, financial and legal experience combined. Not only have we performed loan modifications on our own homes, allowing us to understand what it’s like to be in the clients’ shoes, we have also completed hundreds of successful modifications on other properties, residential as well as commercial.
We are educators as well as instructors. Our experienced underwriters and negotiators do an initial file review, so we only accept clients with very high probability of success based on our experience and our lender relationships.
Please contact me (619.MODIFY.8) if you or anyone could benefit from loan modification or short sale information. We provide insider education via online courses and coaching as well as offer effective and efficient processing and negotiation for loan modifications and short sales.
Thank you,
Brett Robbins
TheHDN.org
LoanModDIY.org