It's a growing problem across the country: Homeowners facing foreclosure are losing their money – and their homes – to loan modification scams. Information is your best defense. If you see the signs of a scam and know the facts, you can protect yourself.
Did you know… the best way to spot a scammer is to know the signs of a loan scam? In some cases, even trusted professionals like real estate agents or attorneys have been involved in loan modification scams.
Did you know…
Possible titles of scam artists include:
- Loan Modification Consultant?
- Forensic Loan Auditor?
- Mortgage Loan Auditor?
- Foreclosure Consultant?
- Foreclosure Prevention Specialist?
- Mortgage Consultant?
- Short Sale Negotiator?
- Compliance Analyst/Specialist?
Did you know…
- You can report a loan scam by calling the Homeowner’s Hope Hotline at 1.888.995.HOPE (4673).
- You can find a list of HUD-approved counseling agencies, like HOME, in your area, here.
- If you lost money to a lawyer who promised to get you a loan modification or save your home from foreclosure, you may be able to get some of your money back. The Client Security Fund (CSF) reimburses clients for being victims of dishonest licensed/state-barred attorneys.
- Loan modifications are changing every day. Read about some of the most common loan modification scams on Loan Scam Alert’s website and the people affected by them.
- There is a helpful video Q&A series online which addresses some of the most common questions relating to loan modification scams and other foreclosure-related issues.
- You can report a loan scam by filing a complaint online through the Loan Scam Prevention Network.
For more information about Loan Scams, go to http://loanscamalert.org.
6 Things you Should Know
Scams aren't always easy to spot – but it helps if you know the warning signs to look for. Here are six red flags to indicate that you may be dealing with a loan modification scammer:
If a company or person…
1. … asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.
2. … guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee, so legitimate, trustworthy, HUD-approved counseling agencies will only promise they will try their very best to help you.
3. … advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.
4. … pressures you to sign over the deed to your home or sign any paperwork that you haven't had a chance to read and/or fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.
5. … claims to offer "government-approved" or "official government" loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.
6. … you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.
If you think you may be a victim of a loan modification scam click the button below to report the information:
or call HOME at 804.354.0641 if you think the company you are working with is not legitimate.
Do you think you are a victim of an abusive loan?
Some lenders take advantage of borrowers by making loans too expensive, or setting abusive conditions such as requiring a big penalty to pay off loans. Many times the worst loans are made by people who come to you and offer you money without your asking for it. Take a look at HOME's brochure on what to look for and if you think you may be a victim of an abusive loan, call HOME now! HOME can help you determine if you have an abusive loan, may be able to help you refinance that loan. If you are falling behind on your payments, HOME may be able to help you avoid losing your home.
There are a lot of honest, good lenders. But there are also dishonest lenders who take advantage of people with money or credit troubles with hidden fees, bad rates, or other costly tricks. Because such lenders prey on people, abusive loans are frequently called predatory loans. Predatory loans come in many forms - such as a first mortgage on a house, a refinancing or an equity line, or a payday or car title loan.
HOME works with victims of abusive or predatory lending practices to help them avoid having the equity stripped from their homes.
For more help, email firstname.lastname@example.org or call 804.354.0641. Mention that you need to speak to someone about abusive loans.
Read more in HOME's Abusive Lending Brochure.
"If HOME had not intervened... I would have lost the property!" John, HOME client (2005)