Nearly 3 million people have had their homes foreclosed every year since the financial crisis.
The foreclosure crisis has started to slow down, but many people are still underwater. They often seek loan modifications or other types of relief for their mortgage.
Unfortunately, there are a number of scam artists that try to take advantage of desperate people. A Filipino couple in Northern California was conned out of over $2,000 this year. You need to understand how these scams work and what you need to do to protect yourself.
Understand How a Mortgage Relief Scam Works
There are a variety of different types of mortgage relief scams on the market. However, they all tend to operate similarly. A con artist will tell potential victims that he can change the terms of their loan for a small fee.
Some of these scam artists will ask you to pay money up front. They will take your money and disappear afterwards. Others will try to trick you into signing your house over to them.
The worst scammers will take money from you every month and promise to pay your mortgage fees to the bank. However, they will pocket your money so that you only end up further behind on your mortgage payments. This will destroy your credit and increase your risk of foreclosure.
What to Look Out for
You can reduce your chances of falling if you know how these types of scams operate. There are a number of warning signs that you need to look out for.
Payment Upfront
A scam artist will generally ask for you to pay them up front. This is a very big red flag. Scrupulous companies will bill you after they have already done the work.
Four people in Orange County California were recently convicted of collecting illegal upfront fees. They conned hundreds of people out of over $130,000. A similar scandal occurred in San Francisco this year. Leah Simon-Weisberg, the director for Tenants Together, said that people should always run in the other direction if a loan modification company asks for an upfront payment.
Asking for Sensitive Information
You will need to be very careful about the type of information that you provide. Many loan modification companies will ask for information such as your bank account and social security number. There is usually no reason for them to need this information.
Unrealistic Promises
Con artists will say anything to get your money. They will usually guarantee that they can change the terms of your loan. You should never believe anybody who makes these kinds of promises. Your lender ultimately decides whether or not to modify it.
Refusing to Meet in Person
You should always verify who you are working with. Never work with anyone who doesn’t want to meet you in person. You also should never pay for any services that you haven’t received online. Make sure that they have a legitimate business address and always meet them before agreeing to anything.
Vague on Details
Most scam artists don’t really know anything about loan modifications. You will need to ask them a lot of questions to figure out if they know what they are talking about.
Be Careful of Loan Modification Scams
Scam artists know that many desperately trying to protect their homes from foreclosure. You will need to be on your guard against them. You can reduce the chances of being their next victim if you follow these steps.
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