When rumors of federally funded help for homeowners programs first surfaced in 2008, the wave of predatory loan modification companies skyrocketed. Many unfortunate homeowners, desperately scrambling to save their homes, shelled out large sums of money to fraudulent companies presenting themselves as being government endorsed.
Since that time, the Federal Trade Commission has stepped in, working tirelessly to shut down these businesses.
After that first wave of chaos, what remains for those who still find themselves struggling to hold on to their property? Should individuals attempt to ‘go it alone’ with their current lender to try to work out a modification plan that will keep them in their homes?
The answer to that question can be tricky. While there are certain individuals who may be comfortable with real estate laws and familiar with the recent changes to loan modification programs, that scenario is certainly few and far between.
So, what’s a homeowner in need of loan modification assistance to do? Here are several tips that will help you steer clear of the scams and give you a quick summary of what’s available to you.
The Red Flags
After listening to countless stories from individuals who were taken advantage of, here is the common thread that can quickly alert you of a fraudulent company:
- Fraudulent loan modification companies are not licensed practicing attorneys or members of the State Bar, so they really have nothing to lose. They’ve set up shop on completely false pretenses. Checking credentials is the first step to a smart choice.
- Up-front fees. Large up-front fees have ranged anywhere from $500 to well over $3,500, just to get the paperwork started. Use common sense. Everyone is in business to make money and support their own families, but paying large sums of money before any work has even begun is a huge red flag.
- Telemarketing type calls. There have been numerous reports of telemarketing pools cold-calling potential clients. They find the names of individuals in pre-foreclosure and repeatedly call, making promises of reduced payments and saving your home. Many, in desperate situations, afraid of losing their home have fallen for these scams. The truth is that no one can promise to lower your payments before all of your income information has been presented and your mortgage lender has been contacted. Any company making these blanket promises should be avoided.
As with any type of purchase or financial decision, caution and common sense should be used. There are shady used car salesmen and there are dishonest, self-proclaimed loan modification “experts.” But don’t allow a fear of fraudulent companies keep you away from the government programs and loan modifications that are available to you.
The Real Deal
Now is the best time to obtain representation and work out a plan of action with a legitimate loan modification company. The Making Home Affordable Program, part of the Obama Administration’s strategy to get the economy and the housing market back on track offers refinancing through the Home Affordable Refinance Program (HARP), and there are numerous mortgage modification scenarios available through the Home Affordable Modification Program (HAMP).
Each program has state specific qualifications and rules, which include income, time of home purchase, total home price, etc. By acting now, you can benefit from a reduced interest rate, an extended loan period, debt forgiveness, or a combination of these and other loan modification methods.
Related posts: