Five Ways to Recognize a Loan Modification Scam

Loan modification scams are prevalent these days with so many people desperate to find financial help to pay their mortgage. Within the next year, about 8 million people are going to face foreclosure which means that loan modification scams will likely increase. If you are in financial trouble and you are not sure how you are going to pay your mortgage from month to month, here are some ways to protect yourself from one of these scams.

1. Do they want to collect fees upfront? It is actually illegal for a foreclosure consultant to collect any fees before they provide any services for you. If the company you are considering hiring to handle your mortgage loan modification asks for payment before they even do anything for you, move along to another company that is more reputable.

2. Are they asking you to pay them instead of your lender? A sure sign that a company is a scamming company is that they ask you to pay your mortgage payments to them instead of to your lender. In most cases, these companies are going to keep your mortgage payments rather than sending it to your lender. Even worse, you may not even know about it until you get a foreclosure notice in your mailbox due to lack of payments. Also, if they ask you to ignore letters and phone calls from your lender, that’s a bad sign as well.

3. Are they asking you to transfer the title to your house to them? Many loan modification scams require you to sign the title of your home over to their company. They promise you that they will let you buy it back in the near future or they will lease it to you. Unfortunately, this almost never happens and the homeowner eventually gets evicted as a result.

4. Are they trying to discourage you from consulting with an attorney? Any company that asks you to not consult with an attorney regarding their services is probably not legitimate. And with a mortgage loan modification, this is one of the signs that they are trying to scam you. Why don’t they want you to consult with an attorney? It’s because they have something to hide.

5. Are they guaranteeing you a loan modification before hearing about your situation? It’s impossible to guarantee someone that they can modify your loan without knowing your financial or mortgage situation first. If a company is doing this, stay away from them…far away from them.

These are just a few of the ways you can spot a loan modification scam so you don’t become a victim like thousands of other people. As a good rule of thumb, if it sounds too good to be true, it probably is. Do your research before choosing a loan modification company to find a reputable one that can help you.