Top SIX Warning Signs of a
Mortgage Loan Modification Fraudulent Scheme
- “Pay us $1,000, and we’ll save your home.”Be Aware! of companies or people that require you to provide a credit card number, cashier’s check or wire transfer before they take any action on your behalf.
- “I guarantee I will save your home – trust me.”Be Aware! of guarantees that a person or company can stop foreclosure and allow you to remain in your house. Unrealistic promises are a sign that the person will unlikely provide the services that the guarantee.
- “Sign over your home, and we’ll let you stay in it.”Be Aware! of anyone who makes this statement or similar statement to you. If someone offers to pay your mortgage and rent your home back to you in exchange for transferring title to your home. Do Not transfer the ownership of your home to no one unless it is through a legitimate transaction.
- “Stop paying your mortgage.”Be Aware! Do not trust anyone who tells you to stop making payments to your lender or loan servicer.
- “If your lender calls, don’t talk to them.”Be Aware! Stay away from those persons or companies that say “Do not talk to your lender”. Your lender should be your first point of contact for negotiating a repayment plan, loan modification, or short sale. Talk directly to your lender or loan servicer.
- “File for bankruptcy and keep your home.”Be Aware! Filing bankruptcy only temporarily stops foreclosure. If the homeowner does not pay the mortgage payments, the bankruptcy court will eventually allow your lender to foreclose on the home. Be aware that some scammers will file bankruptcy in your name, without your knowledge, to temporarily stop foreclosure and make it seem as though they have negotiated a new payment agreement with your lender.
Loan Modification Scheme
Unscrupulous people often times claim that they are affiliated with, or approved by, the government to conduct loan modification activities. The sometimes us terms such as “federal” “TARP” or other terms commonly used by the Federal government. They use these terms in attempt to convince you that they are a legitimate business authorized by the government to perform loan modifications. They will ask you to pay an advance fee to be approved for the loan modification.
Participation in Federal government programs are free to everyone. There is no advance fee to receive a loan modification. Take matters into your own hands and contact your lender directly for a loan modification.
If you feel that you would rather receive FREE assistance, contact a HUD approved non-profit Housing Counseling Organization near you. These organizations provide FREE loan modification service to everyone. Click on the link listed below to find a HUD approved nonprofit Housing Counseling Organization closest to you. http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
Short Sale Flipping Scheme
The unscrupulous Short Sale person targets homeowners who are at risk of foreclosure.
They convince the homeowner to allow them to purchase their home.
They submit a low-ball purchase offer to the lender.
Convince the lender to accept the low-ball offer.
They buy the house and quickly (flip it) sell at the market value or inflated price.
Leaving the homeowner liable for the Federal and State the tax ramifications.
Leaseback/Rent-to-Buy/Caretaker Schemes
This type of scheme is disguise in several different ways and are given different names.
Don’t Be Fooled!
They ….
Convince the homeowner to transfer the deed/title to them.
Claim they will obtain new financing at a lower interest rate at current market value.
Convince the homeowner to rent back or lease the house.
Have the homeowner sign a lease, an option-to-buy or some type of agreement, so that it could appear legitimate.
Collect the rent and deposit payment from the former homeowner and do not pay the homeowner’s mortgage payment.
The Truth is….
Transferring the deed/title does not change the homeowner’s financial legal responsibility to the lender.
The homeowner is still responsible for the loan.
The big and only difference is that the homeowner no longer owns the home because they transferred ownership.
Do Not Sign Your Deed or Title to Anyone. Protect Your Home!
WATCH OUT for Pre-Paid Rental Listing Fraud
To check out a Pre-Paid Rental Listing Service,
Log on to the DRE website, click under Consumers,
Click on Prepaid Rental Listing Service to ensure their
license is active.
Check under unlicensed companies,
To ensure the company you plan to use is not listed.
Payments Outside of Escrow
There have been cases where homeowners are required to pay costs outside of escrow or are to sign addendums to contracts or other types of agreements which indicate payments to other parties outside of escrow. All payments should be clearly disclosed on the HUD 1 statement and not hidden as junk fees. There should never be any other contracts or agreements hidden from the lender. Be Aware! Do not pay any money outside of escrow.
House Stealing
There are fraudster(s) that actually steal a house without the knowledge of the homeowner. The fraudster(s) select a house they want to steal. This house could be a vacant home, vacation home, rental property or even an occupied home. The fraudster fraudulent assumes the identity of the homeowner. Fraudster usually obtains the personal information of the homeowner via the internet and creates fake identification cards to match the name of the homeowner. They then transfer the deed/title by obtaining the forms, forging the homeowner signatures, using the fake IDs and filing out the paperwork with the proper authorities. They now own the home.
House stealing is not a very common practice, but it does exist. It will probably be a good idea to check your respective county recorders website to make sure you still own your home.
Bankruptcy Scheme
Many people claim that filing bankruptcy will stop a foreclosure, this only delays the foreclosure. Filing bankruptcy creates an “automatic stay” that stops any collection effort including foreclosure while the bankruptcy court administers the bankruptcy case. However, the homeowner will eventually have to pay the mortgage lender otherwise the lender will be able to foreclose.
Debt-elimination Scheme
There are many unscrupulous companies and/or people claiming that they are able to “eliminate” your debt. They claim that they will renegotiate the terms of your interest rate on credit cards and even make a legal argument with the homeowner’s lender. They will request an up-front fee and monthly payments, which they claim will be sent to the creditors.
Be Aware! Many of these companies and people only collect the up-front fees and monthly payments and do not pay the creditors or lenders. Visit your local nonprofit credit counseling agency to obtain advice on how to best handle your financial situation.