Mortgage Relief Rip-Offs: Scams to Watch Out For

Renegotiating home mortgages seems to be the name of the game these days, whether homeowners are behind on payments or underwater on your loan. Let’s face it, with these low interest rates now is the time to refinance if you can. But beware, not everyone who says they can help you find mortgage relief and renegotiate your loan are legitimate. The Federal Trade Commission offers consumers information on the most prominent scams that can separate a homeowner from their hard earned money, hope and in some cases their homes.

The first thing to remember is that although reputable realtors and loan modification specialists may contact you through advertising letters and postcards with wording like “Stop Foreclosure!” “Get a Loan Modification,” and/or “Keep Your Home” disreputable advertisements may also use these headlines, but often offer half-truths and outright lies to get your business. If postcards claim “90% of our customers get result,” “100% Money Back Guarantee,” or promise their special relationship with the banks can save you, they are most likely scams. Reputable realtors and loan modification specialists will not offer guarantees-with or without money back. Remember, if it seems to good to be true, it probably is. Check their track record by googling the company name and the word scam. You would be surprised how often disreputable companies are advertised as such through customer reviews and rip-off reports.

According to the Federal Trade Commission, the following scams are most prevalent:

Phony CounselingThe scam is you pay them a fee and they’ll negotiate a deal with your lender to reduce your mortgage payments and save your home. They may claim to be attorneys or representatives from a law firm. The big red flag is that they will counsel you NOT to talk to credit counselors, your own attorney or your lender. They will take your money and do nothing. Remember, if you do not have to do any part of the work, it is too good to be true. Fairy Godmothers who twinkle in to save the day are one of the “too good to be true” things.

The Forensic Audit
In an exchange for an upfront fee, forensic loan auditors (also called foreclosure prevention auditors and mortgage loan auditors) say they will have an attorney review your loan docs to insure your lender complied with the law. The auditors say you can use their reports to avoid foreclosure, speed loan modification process or even have the loan cancelled. There is, however, absolutely no evidence that forensic loan audits do anything to help you get mortgage relief. Direct that money towards your loan or a reputable attorney instead.

Rent-to-Buy Schemes
Con Artists tell you to sign over the title of your home to them as part of a deal that allows you to stay in the house as a renter and buy it back later. They will tell you surrendering the title allows you to avoid the hit to your credit rating so you can get a new loan at a better rate to repurchase the property. However, the deals are structured so they are so expensive buying the house back becomes impossible. Then they scammers raise the rent so you are unable to stay in your home so they are free to sell your house and keep all the profits. Again, too good to be true? Too easy? Just walk away. It’s a scam.

Bait and Switch
In this scam, you are given papers to sign, supposedly to get another loan to bring your mortgage payments current. However, buried in the paperwork is a document that surrenders title of your home in exchange for the rescue loan. Never sign anything without reading it first. If it effects your legal rights the phrase, “Don’t worry, it’s all boilerplate,” should mean nothing. Know what you are signing. If you don’t think you can make sense of the documents, hire a lawyer to review the docs. The extra $200-$450 could save your house.

Rule #1: Do not sign over the title to your home. Transferring title will not transfer what you owe on the mortgage. You will be out of a home and still on the hook for the loan.

Rule#2: If it sounds too good to be true. It probably is not true. Do your due diligence and check them out BEFORE you give them your time, your money or your home. Fraud happens. Protect yourself.

Rule #3: You don’t have to pay any money until the company delivers results. It is illegal for a company to charge you ANY money until they have either 1) given you a letter of offer for loan modification or other relief from your lender, or 2) you accept the offer and the company gives you documentation showing the changes to your loan. The company must also tell you the entire fee it will charge for services.

Rule #4: No company can stop you from talking directly to your lender. Try and get the best deal you can for yourself and check up on the proceedings regarding a loan modification/mortgage relief from your lender. Know your rights and stand up for yourself.

Rule #5: You may be behind on your payments. You may be drowning in an underwater mortgage. But you are no victim. You are not defined by the circumstances you find yourself in today. This may be today’s problem, but tomorrow’s solution is just around the corner.

Mortgage Relief Rip-Offs: Scams to Watch Out For

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