Spotting loan-modification scams
Many newspapers and television stations have reported on loan-modification scammers, people taking money from homeowners who can least afford to be flimflammed. But it's still happening, so the word hasn't reached everyone who needs to hear the message.
Here's an effort to fill in gaps: Loan Modification Scam Alert, a website run by community revitalization nonprofit NeighborWorks America. The site offers "6 Things You Should Know" (for instance, paying an upfront fee to a company for loan-mod help may get you nothing but further in the hole), a list of common scams, people's scam experiences and the like.
It's illegal in Maryland for a loan-modification company to charge upfront fees, so, yeah -- definitely a red flag. The state Department of Labor, Licensing and Regulation has been issuing cease-and-desist orders to operators as part of a nationwide crackdown. You can read more about that effort here.
But don't heave a sigh of relief: As a Salon piece from September notes, it's "a giant game of whack-a-mole," with cracked-down-on companies finding ways to continue operating and firms using loopholes to get around state laws banning the collection of upfront payments. Many states have an exemption for attorneys, and -- alas -- attorneys are involved in some of the companies under fire. (On the other hand, about 1,000 attorneys in Maryland have signed on to an effort to help borrowers for free.)
Whom should you call, then, if you're hoping you qualify for a modification of your mortgage? The company that services your loan -- that's the firm asking for your payments every month. Or the state's HOPE hot line, 877-462-7555, which will refer you to a nonprofit housing counselor. Or connect with a housing counselor directly -- the HUD-approved list of agencies is here.
Categories: Foreclosure help, Mortgage fraud/scams, The foreclosure mess
Comments
Lady, are you serious? "Whom should you call, then, if you're hoping you qualify for a modification of your mortgage? The company that services your loan -- that's the firm asking for your payments every month. Or the state's HOPE hot line..." Are you just making things up and spouting them off? Have you ever tried to call the lender and have them help you? I have and so has everyone i know...not one has gotten anywhere! other than 8 mnths of run around and the HOPE line...thats a joke. Do everyone a favor and dont give out false hope and lousy advice.
Posted by: Jeff Gimble | January 28, 2010 6:28 PM
Alas, Jeff, I wish there were a number for people to call for guaranteed help, but there isn't. (Guaranteeing success, in fact, is one of the scam red flags.)
Some people have had success dealing directly with their servicers, but it's usually a long, hard and very frustrating process. That's why homeowners are turning to housing counselors for help navigating through the process. Groups like St. Housing Housing Aid Center in Baltimore report that it's a long, hard and very frustrating process for them, too, but having a good counselor on your side can make a difference. I've been writing about the foreclosure mess since it began, so I've heard it from a lot of folks.
Best of luck to you.
Posted by: Jamie Smith Hopkins | January 28, 2010 7:15 PM
You won't get a loan mod if current on the mortgage. Ask to speak to the loss mitigation department. Also you must be employed to qualify and still provide income docs. Go on Fannie and Freddie website to see if you are eligible for their loan mod program. If your loan is not owned by either, then it's the servicers discretion to approve or deny. Also, millions of people are doing this on their own. There is no need for a third party unless you are going to file a bankruptcy. A bankruptcy filing will compel the lender to cooperate and often times the second lien is wiped clean if underwater.
Posted by: Frank rizzo | January 29, 2010 7:51 AM