I would rather live my life as if there is a God, and die to find out there isn’t, than live my life as if there isn’t, and die to find out there is!

Monday, May 18, 2009

Scams are Rampant in the Foreclosure Prevention / Loan Modification Business.

No doubt you know by now that there are a lot of low-life scammers out there who are looking to take advantage of homeowners who are at risk of losing their homes via foreclosure. It is really a shame but it seems that mankind will always try to take advantage of others when they are down on their luck or facing trouble. It’s really the opposite of what it should be.

There are several types of scams you should be on the lookout for. One that is fairly common is where the scammer offers to make you a new loan. However, in that large stack of documents you are asked to sign is a document actually transferring the ownership of your home to the person or company. Don’t sign any documents unless you know exactly what they are. Don’t take anyone’s word for what they are except a trusted advisor or your attorney. Don’t let this be an attorney the scammer has referred you to.

Another common scam is the person or company who is coming to your rescue. They profess to take over all communication and negotiations with your lender or loan servicer. Typically, they will want a fairly large fee up front, and often an additional smaller fee when a successful agreement is reached. You may be instructed to not talk with your lender yourself as you may just get in the way of the negotiation process. Often, once the scammer has received your fee they do nothing. They don’t even contact the lender but because you have been instructed to not discuss your loan with the lender yourself, you won’t know they are doing nothing until some time further down the road. Now you are in a worse position because you are further delinquent and also out the money paid the scammer.

One of the newer schemes that is growing in popularity is attorneys who offer to file a lawsuit against your mortgage lender or servicer to stop the foreclosure process. The lawsuits are filed on the basis of an error in the loan documents causing a RESPA or TILA violation or filed on the basis that no legal promissory note exists. Often because of the loans being sold in the secondary market, no one knows where the note is. I am not suggesting that attorneys going down either of these avenues are working a scam. I would think they are not, at least the vast majority are not. They are providing a legitimate legal service. What I have seen though is that the cost to the homeowner for this legal service is very steep.

There are also many legitimate Loan Modification and Foreclosure Prevention firms in business that will provide an honest service to homeowners in trouble. The issue is how do you find a good one among so many dishonest ones? And if you do find one, they are normally very expensive, but at least you will get something for your money.

If you should decide to hire a firm to help you, be sure and do your homework. Check with the Better Business Bureau and licensing agencies. This is one of those times where a referral from someone you trust has real value.

Don’t forget that the federal government is now offering some help to homeowners in jeopardy of losing their homes. You might want to consider starting with HUD who offers a state-by-state listing of counselors who are approved by the housing department and offer their services free or at a low cost.

Be blessed,

Love all – Trust some – Harm none

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Purpleleaf said...

I specialize in short sale mitigation. The homeowner never pays a fee to me before or after. I also work with Realtors. They concentrate on listing and selling, and I negotiate the short sale. No one except the bank pays me. I am ramping up my business and have just created a website where people can get information. http://www.KCRealEstateSolutions.com

Wayne Weeks said...

Thanks for commenting here. From your post it seems you are one of the "good ones" in the business. I hope I did not leave the message that all were bad... as I know that is not the case. Based upon your comments I would encourage all those in need of help check out your site: http://www.KCRealEstateSolutions.com
Be blessed,

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