Posted on: Monday, June 15, 2009

Beware of Mortgage Help Scams

By Paul M. J. Suchecki
Tags: foreclosure prevention, fraud, scams, ...
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As foreclosures continue to rise, consumers need to protect themselves from unscrupulous con artists who offer to help but deliver nothing. According to the FBI, mortgage fraud is a growing threat that is costing the US economy up to $6 billion a year. In the first four months of 2009, 965 cases were opened by the FBI compared to 136 in all of 2004. Illinois has initiated 24 mortgage modification fraud lawsuits. In New York this past week alone Attorney General Andrew Cuomo filed subpoenas on fifteen mortgage modification companies as part of his investigation into the foreclosure rescue industry. Foreclosure prevention scams can wreck your credit and wipe out any equity that you have left in your home. How can you protect yourself?

According to the California Department of Real Estate consumers should be aware of anybody who demands the payment of an upfront fee for a mortgage modification. These fees can be thousands dollars, which many home owners can ill afford. Instead California’s DRE suggests that borrowers approach lenders themselves for loan payment reductions. Mortgage Outreach.org provides a detailed do it yourself guide here.

Other options are to choose non profit foreclosure avoidance counselors, listed here by the US Department of Housing and Urban Development, HUD,  or the Hope Now Alliance.

If you can’t do it yourself, find a legitimate qualified licensed representative. Licensed attorneys and real estate agents in most states are allowed to charge in advance, however be sure to check them out with the appropriate authorities such as your state’s department of real estate, bar association or Better Business Bureau.

Be sure to ask specific questions about the exact nature of the services offered. If the promises are too good to be true, be wary. Nobody can guarantee to save your home, repair your credit, forgive past due payments or lock in a fixed rate low interest mortgage. The best anybody can do is make an effort on your behalf. If you choose to pay in advance, only do so if there is some form of money back guarantee.

According to law enforcement officials, here are other red flags:

• Don’t respond to hand delivered fliers. Anybody advertising this way is protecting himself from prosecution for mail fraud, a federal crime.
• If an agency tells you not to contact your lender or servicer, there’s a good chance that the negotiator does not have a relationship with it. In fact, a legitimate loan modifier like Mortgage Outreach Services works under contract with lenders, paid by them to find a mutually beneficial solution for both the lender and the borrower.
• If you can’t immediately learn the name of a legitimate, established company behind the proffered mortgage reduction efforts, keep away.
• Be wary if anybody offers to pay your mortgage, place your home in a trust and rent your home back to you until you are able to resume your payments. The likelihood of this happening is slim.
• Do not give a Power of Attorney (POA) when it comes to handling your real estate, or you could find that your title has been  signed over.
• Get all promises in writing. Make sure that every document is fully filled out and you have exact, duplicate copies. It’s a good idea to initial each page.
• Understand every document you are signing. If you need a translator, make sure that it is one of your own choosing.
• Never sign over your deed or title unless it’s to your lender as a last resort Deed in Lieu of foreclosure.
• Make sure your mortgage payments go directly to your lender or servicer, never to a third party.
• Be wary of high pressure tactics. You do have the time to check on the integrity of the people with whom you plan to work.
• Remember, if you are in the midst of a loan modification with a legitimate firm, it can take up to two months for the change in your loan terms to take effect. Never intentionally miss a payment on the advice that it will help your cause.

If you feel that you are the victim of mortgage fraud, contact your local office of the FBI, your state’s attorney general office or department of real estate to complain. The faster you do so the better. Scam artists move quickly and are adept at covering their tracks.

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