Five Tips for Avoiding Foreclosure and Loan Modification Scams
Thieves target us at our most vulnerable times and, in
today’s struggling economy, a growing group of distressed homeowners is presenting a luscious target for scammers.
They step forward to offer help but do little more than take advantage of the situation.
The thieves may steal a homeowner’s identity, charge big
fees to “rescue” a home from foreclosure, or trick the homeowner into signing away the home, the Federal Deposit Insurance Corporation reports.
The FDIC offers five tips to avoid being taken by these criminals:
- Deal with people you know: If you can’t make you
mortgage payment, get in touch with your lender or
loan servicer (the company you make the payment to
each month). They may be able to lower your payment
by dropping your interest rate, lengthening your loan
period or reducing the balance you owe.
- Refuse to pay a lot for help: Legitimate housing
counselor can help you negotiate with your lender
and will charge you either a small fee or nothing
at all. Scam artists, on the other hand, charge
large up-front fees.
You can find a housing counselor through groups
such as NeighborWorks America (visit
nw.org or
call 888-995-4673) or the U.S. Department of
Housing and Urban Development (visit
hud.gov or call 800-569-4287).
- Keep sending any mortgage payments to the same
address: Some scammers will ask you to send your
payment to them instead of your lender or loan servicer.
Don’t do it. They are likely to walk away with it. If you
can make a payment, send it where it is supposed to go.
- Be wary of unsolicited offers: If you didn’t inquire about
a service being pitched by mail, e-mail or in person, check
out the source of the offer before responding. Try your
Better Business Bureau or your state consumer protection
office. Michael Bernardo, manager of the FDIC’s Financial
Crimes Section, said scammers often claim to be affiliated
with a government-endorsed assistance network or with a
lender. Be especially worried about any group that says it
will guarantee results or has a near-perfect success rate.
- Understand before you sign: Get help from a lawyer or
trusted financial counselor if it would help. Be concerned
if anyone tells you not to talk directly to your lender or not
to get a second opinion. And be worried if someone
promises to pay off your mortgage or repair your credit if
you will sign over the deed to your home. You may never
get it back.
If you think you already are caught up in a scam, contact the authorities. You can find
consumer resources on BetterBorrowers.com. Reach out for the Federal Trade Commission (visit
ftccomplaintassistant.gov or call 877-FTC-HELP) or get in touch with your
state’s Attorney General. You can find out more about state's Attorney General assistance through the National Association of Attorneys General (
naag.org).