Scammers! How to Identify and Avoid

Posted by Help Now on Thursday, December 30th, 2010 at 6:24am.

LOAN MODIFICATION SCAMS

It is sad that during times of hardship, those who cause harm target the vulnerable.

There are a lot of loan modification scams out there. It is important to remember that not all loan modification programs are scams, and not all loan modification companies are scammers. Loan modifications are very valid in our current market. However, to help you identify the legitimate options from the scammers I have a few characters you should watch out for.

Common Scammers to watch out for:

The Disappearing Hero: “I can help you, and all it costs is a small up-front fee.”


The Disappearing Hero shows up to save you from your financial woes. They sympathize, console, and offer hope. They flex their muscles and boast about their ability to save you from your hardship. All the Hero needs is a 'small' up-front fee. This could be anywhere from $700 to $7,000. The promise is made that once you pay the upfront fee you won't have to make any more house payments until the loan modification process is complete. The Hero get's their fee, and flies off into the night. Months later you discover that there is a notice of default filed on your property, and your hero is nowhere to be found.

The Grant-Giving Goblin: “Trust me I'm from the Government!”


There has just been a notice of default filed on your home. You don't know what to do. When you get a life-line in the mail from the Goblin. This very official looking letter informs you that you are entitled to government bailout money! All you have to do is send some personal information to the trustworthy government address enclosed. There is a place to include your bank information so they can review your financial situation and deposit the money into your account. If you don't feel comfortable sending your bank information through the mail, just send a check to the Grant-Giving Goblin and he'll do all the work for you. Sometimes the Goblin will call to confirm that you received the letter and answer any of your questions. Once the Goblin receives your money, or your information, you will never hear from them again, and your money is lost.

Self-Prescribing Surgeon: “You can't get a loan modification, but I have something special that'll work just for you.”


The Surgeon contacts you to do a preliminary exam of your financial situation. They ask questions to see if you qualify for a loan modification program. With sympathy the Surgeon announces that you do not qualify. However, there are other available alternatives that the Surgeon prescribes. These "alternatives" range from filing bankruptcy to quitclaiming your interest to a third party (the Surgeon). You are assured that the property will not be foreclosed because the Surgeon will personally take responsibility for the mortgage. The Surgeon takes possession of the home, then turns around and lease options the property right back to you.

The best thing you can do to protect yourself from these scammers is to work with a licensed professional. As Real Estate professionals we are trained to help you face these very problems.

Avoid the scams!

 

Here is a list of simple things you can do to protect yourself:

  • Do not work with any individual or company that is not licensed. Use the NMLS Consumer Access system or call 801-530-6747 to make sure that the loan modification company is licensed with the Utah Division of Real Estate as a loan originator.


  • Talk to your lender or servicer directly. As soon as you think you could have a problem paying your mortgage on time. Let your lender know your problems, and discuss ways you might resolve the issues. You will not have to pay your lender or servicer to modify your loan IF you meet eligibility requirements and are qualified.


  • Make your mortgage payments only to your servicer or lender. Never make your mortgage payment to a third party.


  • Make sure you read and understand all documents you are signing.


  • Do not sign any documents with blanks.


  • Do not ignore mail from your lender or servicer.


  • Do not pay an up-front fee to anyone for loan modification services. Do not pay any fees until you receive a written offer from your lender or servicer for modified loan terms and details about the services you will be provided..


  • Do not stop making your mortgage payments. Doing so will put you closer to foreclosure.


  • Do not work with a loan modification company or individual that appears to be a government agency or government program. You can find government-sponsored mortgage modification and refinance programs at www.makinghomeaffordable.gov and http://portal.hud.gov.
 
  • Do not sign a warranty deed or quitclaim deed giving your title to anyone. When you lose title, you lose ownership.

  • If you think you are being scammed, file a complaint with the Division of Real Estate.

About the Author:

Utah Dave - Neighborhood ExpertUtah Dave - Daybreak Neighboorhood Expert and Local Resident

My friends nicknamed me Utah Dave in high school because they said it didn't matter where we went in Utah, I would know how to get there and who we needed to talk to. The name sticks today as UtahDave has formed into a professional real estate network of Neighborhood Experts all across the state. I live in Daybreak with my wife and 4 amazing children. I enjoy dancing (which is how I met my wife Dawn) as well as traveling, coaching, and learning.

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