Mortgage Modification Cons To Avoid

Bookmark and Share
Tough times call for tough measures; at least that is how fraudulent companies are operating these days. As technology advances so do the techniques used by scam artists attempting to prey on vulnerable homeowners. The mortgage debt industry has become a major player in the market and criminals are quickly cashing in. As a homeowner it can be hard to tell the good from the bad, especially when you are blinded by desperation to avoid foreclosures.

Common Scams

In the past, mortgage modification and foreclosure solution scams were hardly existent. As both of these practices became more prevalent in the legitimate sense, along came an increased sense of consumer urgency. With more homeowners fighting for their homes more than ever before, the scam artists have learned how to mimic the real deal quite well.

One of the most prevalent scams in operation is mortgage debt relief servicers who offer to resolve debts, securing loan modifications and make payments on the homeowner's behalf. What typically ends up happening is the homeowner gives the company their personal and banking information, while the company takes the payments out to pocket the money. These companies never secured a deal with the lender, never make the payments as promised and end up closing operations by the time the homeowner finds out.

Avoiding Victimization

The Federal Trade Commission has been investigation claims of fraud and compiling a list of information for consumers to better educate them as to the signs of a con. The most important is that homeowners have the right to resolve their debts directly with their lender; the use of third party companies is never required. However, if a third party company has to be used there are many things homeowners should be on the lookout for.

One of the biggest red flags for a homeowner should be unsolicited help. Any company that contacts a debtor without being solicited, says they obtained their information from the lender or found them through a foreclosure database should be considered cautiously. Rarely, does this information get transmitted in this way and homeowners should always verify the information and tie to the company directly with their lender. Next, companies that promise or guarantee loan modification services are a big indicator of problems. Only a lender can approve a loan modification or other foreclosure solution, never can a third party company be 100 percent sure they can close the deal. Also, any company that requires upfront payment of services, or for payments to be automatically drafted through their payment system, should be avoided. Never pay for services that have not been rendered or provide a third party agency direct access to one's money.