How to Avoid Loan Mod Scams, Fraud, Ripoffs

My office has been getting calls from concerned homeowners who feel lied to, tricked, scammed, or defrauded by loan modification companies. Here are some basic things to look for to avoid being a victim.

Difficulty: Easy

Instructions

Things You'll Need:

• Nothing. Just takes notes.

1. Make Sure To Exercise Some Common Sense. If something sounds too good to be true it probably is. Don't be lured by false claims and assertions such as "we get principal balance reductions for all of our clients." Or, "everyone qualifies for a loan mod." These claims are simply too good to be true.

2. Trust your gut instincts. If you go to the office of a loan modification company and it looks like they could flee town on a moments notice, do not hire them.

3. Ask alot of questions and get references. Do not assume that a fancy website or slick sales talk means that the loan modification company is legitimate. Do you homework. You are trying to save your home after all.

Tips & Warnings

• TOP FIVE TIPS TO LOOK OUT FOR IN AVOIDING LOAN MODIFICATION SCAMS: Beware of any company that promises principal loan balance reduction. Although most borrowers are seeking principal reduction, any company that guarantees this should be seriously scrutinized. Don’t be fooled by their claims “if we are not successful we will give you your money back.” By the time you go to get your money back they may no longer be around. Don’t be fooled by offers of “100% money-back guarantees.” This is the best way for a company to get your money. By offering you a full refund if the loan modification company is not successful, many California and Arizona homeowners part with their money with the belief that these scam loan mod companies will return their money upon request. We are finding that 100% guarantees are often not honored, and in fact, the company may claim they would return the money except for the fact that the Client breached the contract (usually they concoct some bogus claim, like “you never sent us all your loan documents for the loan audit). Other times, you find out the company simply refuses to return your calls and emails. Beware of the “attorney-backed” or “attorney-based” firms. What exactly does this mean? Have you ever heard this type of advertising before out of any type of company (ex. “we are an attorney-backed mortgage loan company?). What we are seeing is that brokers and non-brokers will make these types of claims in order to lure you in with the hopes that an attorney will be handling your case (i.e they are trading off the power of an attorney). At the end of the day we find often times there is no attorney whatsoever doing any work, and/or you are told that an attorney does a forensic loan audit (but the customer mysteriously never receives a copy of the audit or receives a shoddy audit). If you want the attorney clout, you should just find a reasonably priced attorney shouldn’t you? Also, these types of companies will often specifically disclaim in their agreements that “we are not a law firm and do not provide legal services.” If this is the case, then what exactly does the “attorney-backed” mean to you, the homeowner? Ask to read their contract before you sign up, and ask them what you are getting. We see these types of companies in Phoenix and California. Beware of Companies that advertise on TV and Radio. This may seem like a strange tip. However, this is what we are seeing, companies that advertise on TV
• Other factors not listed herein may be important. This list is not an exclusive list.

[robinmomof4]

on 9/1/2009 Yes its easy to be sold on what "you want to hear" Fact is there are NO Guaratees with a loan modification as to what the outcome will be.