Last week was National Consumer Protection Week and the Government wanted to make the most of the heightened awareness to publish some general guidelines and advice. One of these releases was made by Florida Attorney General, Bill McCollum, on the issue of loan modification scams. This issue is right at the top of the list of complaints made to his office. The Attorney General pointed out how the desperation with which many homeowners are protecting their homes will continue to breed con artists that want to make the most of this desperation.
Not all loan modification companies are scams and some can provide specialized counsel in the somewhat complex world of loan modifications. However, there are some tell tale signs that we should keep alert to if we are dealing with loan modification companies. The Attorney General warned people from dealing with companies that ask for up-front fees on foreclosure rescue services. This is actually illegal and only carried out by loan modification agents of dubious reputation.
The Florida Attorney General advised listeners to contact their lenders before contacting third party companies or agents and to never pay up front for a loan modification. The Attorney General office is busy in Florida with over 90 companies being investigated and 20 open lawsuits.
The public statement echoes the words of advice shared by many experts. These guidelines highlight the main issues borrowers must be aware about when dealing with loan modification companies in order to avoid scams.
These tips include:
1) Keep well away from companies that “guarantee†they can save your home from foreclosure. This is like car salesman guaranteeing that if you buy a certain model you will get a date with the hottest girl in the class. It might help, but ultimately the decision is out of the salesman’s hands.
Only the lender can decide if a loan modification is granted or not. It is simply not true that any loan modification application method can assure your success.
2) If your loan modification agency tells you to not contact your lender, lawyers or financial counselors, RUN! This is like the kidnapper asking the parents not to contact the police. The reason why scammers ask you not to contact anybody is just as obvious.
3) Finally, if a business asks you to make payments directly to them and to stop paying your lender, you can be sure you are dealing with criminals. Run to your nearest police station and sue the crooks.
The fact is that the government has subsidized the creating of hundreds of counseling offices around the country to provide help to homeowners that are struggling with their mortgages. You are well advised to visit these free counseling agencies.
However, if you do not trust these agencies, still cannot tell the difference between an NPV test and a hardship letter, but still need a loan modification, make sure you find a reputable company that is not simply trying to take advantage of your situation.
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