Monday, 11 March 2013

Common Loan Modification Techniques Carried Out by Scam Artists



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Loan modification and foreclosure rescue scammers are some of the best scam artists in the United States in recent times. They take advantage of distressed homeowners who are behind on their mortgage payments, giving them a false sense of hope while also potentially draining their bank accounts. Scam artists sift through foreclosure filings and target areas known as centers of foreclosure activity. Their advertising may come in the forms of door-to-door solicitation, flyers on telephone poles or roadside signs or traditional web, radio and television advertising.

It may be hard to find the time to research what constitutes a loan modification scam, so here are a few of the techniques scammers use when fooling people on the brink of foreclosure.

Claiming a modification or foreclosure defense is “guaranteed”

Loan modification scam artists will do anything in their power to convince their target that they can definitely get the lender or servicer to modify a loan. A scam artist posing as a member of a legitimate organization approved by, or affiliated with, the government may also claim that a homeowner qualifies for a specific government program that aids in foreclosure defense or loan modifications. The truth is, a proper foreclosure defense or loan modification is never guaranteed, and access to certain government programs are only guaranteed for some borrowers.

Asking for upfront fees

Consumers, remember this: it does not cost a cent to qualify for specific government programs meant to aid in the loan modification process or foreclosure defense. It also doesn’t cost a cent to speak with a Housing and Urban Development (HUD) approved housing counselor. If an organization is asking for thousands of dollars upfront for access to the latest government program or a recent mortgage settlement, it could be a scam. Homeowners should also be wary of scammers who may want the homeowner to pay the monthly mortgage to them and not to the lender.

Posing as professionals

Today, scam artists will do anything to appear as legitimate as possible. It is common for non-attorneys to pose as attorneys and offer their loan modification services. A red flag should be raised when a law firm only offers loan modification services, and nothing else. Some law firms are even posing as non-profit groups, or offering bogus loan workouts or forensic loan audits.

Scammers may also convince a homeowner to transfer the title or sell his or her home to a “foreclosure rescuer.” The scam artist will try to convince homeowners to stay in the home as renters and tell them they will be able to buy the home back later once they’ve recovered financially. Then, the scam artist is able to evict the victim and claim the home.

Homeowners who would like a loan modification or who are at risk of foreclosure should never avoid any communication from their lender. Free foreclosure counseling is provided by HUD-certified housing counseling agencies, or by contacting the Homeowners’ HOPE Hotline.

Posted by Amy Lewis :) A financial writer and blogger. She has been written many articles on finance articles.

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