Avoiding Home Loan Modification Scams

The nationwide economic recession has cost tens of thousands their jobs, forced millions into foreclosure and resulted in countless bankruptcy filings. Despite their best efforts, many people are falling behind on mortgage payments due to financial circumstances beyond their control. In an effort to avoid foreclosure, more and more people are seeking loan modifications as a way to lower payments temporarily (or permanently), making them more affordable and making keeping the home a real possibility.

Unfortunately, at a time when foreclosures are at a record high, unscrupulous companies are preying upon well-meaning homeowners by advertising unrealistic or unethical loan modification schemes. These con artists are hitting cash-strapped mortgagees right where it hurts – in the wallet.

Protecting Yourself

There are things that even struggling homeowners can do to protect themselves from scams, however. By being cautious, homeowners can get the help they need while not paying too much and without being tricked by impossible promises. And since National Consumer Protection Week has just passed, this is the perfect time to raise awareness of the actions a responsible homeowner should take to both get help with their mortgage payment issues and avoid being scammed:

  • Get help as soon as you can – by the time you fall a few months behind, your lender might initiate foreclosure proceedings against you
  • Make sure you speak with someone in your lender’s loss mitigation department – not the collections department – they are the ones who have the authority to help you modify the loan to make it more affordable
  • Consider free alternatives sponsored by local housing assistance agencies or by the federal government like the Home Affordable Modification Program (HAMP)
  • Never pay an upfront fee – reputable mortgage modification and loan renegotiation services will not require payment for their services before the work is done
  • Avoid companies who offer a guarantee of success – not every homeowner is eligible for a modification, so no one can promise you that you will receive more favorable loan terms
  • Never accept an offer to pay the company directly instead of paying your lender; this is never a good idea and should be a red flag that the company is trying to take advantage of you
  • Come to the modification process with an open mind and as much information as you possibly can about your monthly expenses and any income you have coming in

While you can certainly take steps to modify a mortgage loan and try to avoid foreclosure on your own, sometimes financial problems can be best addressed with the help of an expert. Contact an experienced bankruptcy attorney to learn more about debt consolidation, debt management, bankruptcy, foreclosure avoidance and other options to get your financial life back on track.