As more information becomes available regarding loan modification programs, scams become more frequent and plague the internet, email inboxes, and physical mail. If you’re in search of a loan modification, learn which are the most common loan modification scams to avoid falling for. The US Department of Housing and Urban Development has an active campaign and provides resources to protect you from these scams.
Continue reading below for the five most common scams in Florida:
Foreclosure Counseling Scam: This scammer will offer to negotiate your mortgage payments with the bank. They will likely caution you against speaking to your bank directly or speaking with your lawyer, and will ask for an upfront fee. The fact is that monthly mortgage payments cannot be negotiated. Loan modifications are obtained by submitting an application, which the bank then reviews and determines whether you qualify for a modified loan and the payment amount.
Fake Government Programs: You may receive a letter in the mail or a phone call from someone advising that you are eligible for government loan modification program. They will probably use jargon and phrases that sound like legitimate federal programs. Immediately end the phone call and tell them you will call them back, then call your bank directly. If you are eligible for any program, they will have that information available, and then you can be certain that you’re speaking with an authorized person.
Bait-and-Switch: This is when a scammer leads you to believe that they have obtained a loan modification on your behalf, but the documents they have you sign actually surrender the title or deed to another party in exchange for a “rescue loan.” In order to avoid this situation, make sure all loans are going through your bank by calling them and confirming all appointments, and reading all documents thoroughly before signing.
Short Sale Scam: This may sometimes be done by a licensed real estate professional, thus the indication that it is a scam will be in that they will promise a short sale for an upfront fee. Additionally, this person may go through illegal lengths to obtain a short sale, such as misrepresenting the value of the home to the lender.
Bankruptcy to Avoid Foreclosure: Bankruptcy does often stop a foreclosure, but it’s only temporary. The best way to defend a foreclosure is with an experienced foreclosure defense attorney. Bankruptcy will harm your credit more than is necessary, thus it’s critical that you research all other alternatives prior to committing to bankruptcy.