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Watch Out
for Loan Modification Scams !
Just when you thought you'd seen the end of
sub-rime, and subprime mortgage lending practices, a new scam has
entered the marketplace. Many of the unethical brokers who brought us the
subprime debacle have resurfaced, and are now offering mortgage fraud
disguised as Loan Modifications.
You would think that the people who helped inflict the subprime mortgage
crisis on America might consider another line of work. The industry has
crumbled, and lenders are keeping their portfolios as clean as a whistle for
the foreseeable future.
But when the going gets tough, scam artists find a way to get going.
They've staked out a whole new niche--loan modification scams.
Mortgage rate modification: The
good and the very bad
The economy is in brutal
shape, and many people aren't thinking about mortgage fraud. They're
thinking about innovative ways to avoid foreclosure.
An increasingly viable option has become the mortgage modification, in which
a lender restructures a loan. A term and rate modification can alter the
monthly payment on a mortgage, providing just enough wiggle room so that a
borrower won't lose his or her home.
Lenders are willing to work with borrowers but, with the rash of
foreclosures, many are overwhelmed. Non-profit counseling agencies can't
keep up with the demand, either. This has opened the door for the unsavory
mortgage fraud artists, and they're coming in droves. These individuals,
many of whom are former mortgage or real estate
brokers, will promise to handle the loan modification process, charging an
upfront fee of $1,500 to $2,000 for their services. Some of these
individuals are legitimate, but many are fraudulent.
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Avoid the loan modification scam
To keep out of harm's way, only work with a
broker who's
currently licensed and has a guaranteed success rate. Don't be shy about
asking for references, including people who can verify that the broker is
legitimate. Check with a lender to see if they've dealt directly with your
candidate. Mortgage bankers want to avoid foreclosures, and even if they're
overwhelmed, they can at least direct you to credible assistance.
Also check in with the Better Business Bureau. The loan modification scam
is no longer under the radar, and government agencies are beginning to shut
down many of these operations. Information is always the key to avoid such
scams, so talk to as many people as possible about the reputation of a loan
modification specialist. No matter how dire your situation may seem today,
it will only get worse if you fall for a fraudulent scheme.
The subprime lending crisis caused a lot of pain and suffering among
borrowers and lenders alike. Now that the smoke is beginning to clear, and
people are taking steps to restructure their loans, be extremely careful not
to fall victim to the same shady lending practices that caused many of the
current problems in the first place. Before you undergo a
mortgage rate modification, check a broker's references and
double-check your deal. In this economy, you definitely don't want to make
a bad mortgage decision. |
