Six things you can do to avoid a mortgage mis-modification

If you’re a homeowner who is struggling to pay the mortgage, a website, phone call or mailer that offers to reduce your mortgage payment by several hundred dollars a month sounds awfully tempting. Unfortunately, it could turn out to be just plain awful.

Today, the FTC and the Consumer Financial Protection Bureau announced Operation Mortgage Mis-Modification, a group of lawsuits that charged companies with taking mortgage statement and calculatorhundreds — sometimes thousands — of dollars for loan modifications, and then leaving homeowners worse off.

According to the complaints, some companies pretended to be associated with the government; others guaranteed that they could get loan modifications regardless of the circumstances. One company claimed to be a non-profit whose purpose was to educate the public about home retention options.

The FTC says these companies had a few things in common, too: they all charged upfront fees for loan modifications, and then stopped answering calls and emails from their customers.

If you want to avoid a mortgage relief scam (and who doesn’t?), here are six lessons from this sweep:

  1. Don’t pay an upfront fee to get help with a mortgage modification. No way. No how. No matter what someone tells you. It’s against the law for companies that provide mortgage relief services to charge you before they’ve given you a written offer from your lender and you’ve accepted the offer.
  2. Don’t send your mortgage payment to anyone but your lender. Companies that ask you to send your mortgage payment to them while they negotiate on your behalf almost always take the money and disappear. If your lender doesn’t get your mortgage payments, you could lose your home.
  3. Don’t fall for official sounding names. Shady organizations try to make themselves sound legitimate by choosing names like the “Federal Debt Commission” or “Federal Assistance Program.” That doesn’t mean they’re affiliated with the government.
  4. A forensic loan audit won’t prevent foreclosure. There’s no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed auditor, mortgage professional or lawyer.
  5. Don’t stop making your mortgage payments. If a company tells you to stop paying your mortgage, it also must warn you that doing so could result in losing your home and damaging your credit.
  6. Don’t do business with a company that guarantees to get you a modification. The law requires that companies tell you that your lender may not agree to change your loan.

If you’re struggling to pay your mortgage, there are legitimate programs that can help. Talk to your lender, or visit hopenow.com to find out more.

Tagged with: debt, scam
Blog Topic: Avoid Scams

Comments

can you put on the names of some of the companies that do this. I think we were ripped off by a California company for $3,000 for this. How can we get some help getting our money back?

Please file a complaint at ftc.gov/complaint. You also can file a complaint with the California state consumer protection offices.

I applied for a refinance and a company answered. It is Loan Depot and the persons name is Jason Feldman.
I am thinking that this is not a good company. Something tells me it is not right. Do you know anything about this company in CA?

Please file a complaint at ftc.gov/complaint.

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