Scams and Fraud Warning Signs
Background on Current Loan Modification Scam Epidemic
Our country is in the worst foreclosure crisis it has ever faced. Since 2009 when the Making Homes Affordable Program was initiated millions of homeowners have lost their home. One of the prolific problems has been the drastic decrease of property values and loss of employment that many homeowners across the United States have had to deal with by no choice of their own. For many, mortgage payments are no longer affordable and making regular payments have become unaffordable. Due to the loss of equity, refinancing is no longer an option. Due to the stress being placed on homeowners by non-assisting mortgage banks and mortgage companies, Mortgage Modification assistance is in high demand. Homeowners that have attempted to work with their mortgage lender or bank have only had the problem spiral out of control due to unscrupulous actions of the same lenders and banks the homeowner reached out to. Due to the lack of care and concern by the mortgage lender homeowners are at risk of losing their homes. The fear of facing foreclosure leaves the homeowner in a desperate situation.
The vulnerable feeling homeowners are facing opens doors for the scammers. Having the knowledge to spot these scammers will help protect you from them and will save you time, money, and headaches. The best way to protect you from being scammed is by hiring an Attorney that has a sound record with the BAR Association. This website has been designed to help you spot scams, the types of scams connected with mortgage modifications, and what that you should be aware of so that you do not find yourself in one of these situations.
Here are some scam scenarios you should be aware of.
1. Most scams begin with online solicitations that utilize “government logos” and “official looking” sites to entice homeowners to provide their information regarding their mortgage problem. Many scam companies will state they are connected with the “Making Home Affordable Program” or any of the lenders your mortgage is assigned to. The company name may be similar or they may claim to be affiliated you’re your mortgage lender or bank. Although the scammer’s website may look legitimate in many cases it is not. In some you may hear or see commercials claiming to offer different government-approved modification programs. Be careful of these too. This is a tactic used to make you feel safe and assured that you are working with a legitimate company. The best option is to seek the advice of a Law Firm or Attorney that can assist you in obtaining a mortgage modification and handle your foreclosure if necessary.
2. One additional scam is that companies such as modification companies or home rescue companies are charging fees to modify the debt. You should only pay a fee if you are retaining an Attorney or Law Firm to handle the modification or foreclosure. Attorneys charge a retainer fee which is an upfront fee to defend you in a case whether it is an out of court settlement or a case that must be handled in a court of law. Unless you have retained an attorney for legal advice, foreclosure defense, or assistance in a modification beware of payments requested from non-attorney companies, these are scams. An Attorney will provide you with a retainer agreement called an Attorney Client Engagement Agreement which will spell out the scope of legal services being provided. This agreement is your protection from scams that are preying on homeowners. Make sure that if you are going to hire anyone, you seek the advice of an Attorney.
3. Another scam that has become prevalent while homeowners are struggling with their mortgage payments is when scam companies pressure you to sign documents that are disguised as modification documents that may actually be the deed to your home. Many homeowners have been scammed out of the rights to the property. An attorney of Law Firm would never attempt to convince you to sign the rights of your home away. These types of scams are called “Leaseback” and “Rent-to-Buy” schemes. In the scam you may be encouraged to sign over your deed or transfer your title. You can then rent your home from them and in a few years or eventually even buy it back at a reduced amount. The scammer will advise you that a new borrower with better credit will be able to get a loan on the property enabling you to stay in your home. The terms of the scam are usually difficult for the homeowner to afford but the fear of losing the home completely pushes homeowners to agree to unaffordable payments since they feel there is no other option. Most likely by this time the scam unfolds the new borrower, who has taken over your property rights, has defaulted on the loan, taken your money and now you face eviction. The truth of the matter is that once you sign over your deed, you lose your rights to the property, but remain legally responsible for paying your mortgage. The best way to avoid these scams is to seek the advice of an Attorney or Law Firm.
4. Another scam that has risen in popularity is the “forensic audit scam”. This is when the scammer attempts to collect money stating that your mortgage documents are going to be reviewed to determine if your lender was compliant with state and federal mortgage lending laws. The scammer will attempt to tell you that you can get your home for free due to discrepancies with the original documents that were used to approve your loan such as a promise to cancel your loan, force the modification approval, or that you will be entitled to a “free home”. Not too many homeowners end up with a free home and this scam should raise flags. There are no guarantees that even if something was wrong with the documents, you would not be obligated to pay your mortgage or entitled to any of the programs based on the errors. . Inaccuracy or errors does not imply that the loan was invalid and therefore the lender cannot collect the money you borrowed. However, if you believe there may be discrepancies with your original mortgage, seek the advice of an Attorney. When you retain an attorney, although they are not forensic auditors, they have the legal knowledge to review your mortgage documents and determine what your legal rights are in your particular situation and what your options in a defense or modification can be.
5. One other scam is when someone guarantees they will save your home or stop foreclosure. There is no guarantee in the process to postponing a foreclosure or sheriff sale. By retaining an Attorney, they can assist in foreclosure defense. A foreclosure defense will prolong the foreclosure process while the attorney fights for you in court attempting to save your home and find a solution to the mortgage crisis at hand. One other scam connected with the guarantee scam is being sent by mail to your home as an advertisement stating that you should file bankruptcy to save your home from foreclosure. This is another red flag. Bankruptcy will give an “automatic stay” under Federal Law that halts the foreclosure process while the bankruptcy process unfolds. This only postpones the process and does not permanently stop the foreclosure. The lender will not be able to continue with the foreclosure until the bankruptcy court lifts the automatic stay. Bankruptcy is always a last resort and before making a decision to file you should consult with an Attorney to determine if this is the right step for you and your family. If a “Modification Company” is discussing bankruptcy options it is most likely a scam. A modification company is not Law Firm; therefore they cannot offer legal advice and you should not trust that they have your best interest in mind. Some of these modification companies fly under the radar because they set you up on payments comparable to the goals of the new loan modification. Be careful if it sounds too good to be true most likely it is. Remember, lenders and banks have Attorney’s trying to take your home; you should have one that will help you protect your home.
Avoid scams with the following facts on loan modification.
The best ways to avoid a scam is by retaining an Attorney and verify the Attorney’s credentials with the BAR Association. Attorneys have the resources and knowledge of your rights to save your home. Attorneys understand federal and state laws as well as lending regulations. Modification companies are not attorneys, therefore they cannot legally represent you in anyway. They simply have a business license and most likely do not have knowledge of federal laws and state laws and in most cases are breaking the law. Modification companies or scammers have nothing to lose and a huge financial gain. Attorneys have your best interest in mind and are closely monitored by the BAR Association not to mention the respect that comes from the lenders when you’re properly represented in the mortgage modification. Lenders and banks are more cooperative with attorneys as they realize that an attorney shows a more threatening presence and can properly defend a client if the Lender or Bank fails to communicate with the Law Firm or Attorney representing the homeowner. In many cases a homeowners doesn’t know where to turn, our advice is to speak to an Attorney so your family is provided every legal option when trying to save your home.