Homeowners struggling with mortgage debt know just how tough it can be to secure a loan modification or foreclosure alternative deal with lenders. So why are so many people ending up victims of modification scams?
With a few legitimate federal programs floating around offering help to homeowners in need, more fraudulent modification companies are popping up claiming they can secure these deals on the homeowner’s behalf. Dangling a carrot of mortgage debt relief in front of desperate homeowners is an easy sell. What the homeowners don’t see is the stick and who is holding it. The stick is getting homeowners to provide direct access bank information in exchange for resolving debts on their behalf, promising to make payments for them. The problem is that these fraudulent companies never actually negotiate a deal with the homeowner’s lender, never make the payments as promised and may even take the money out of their accounts and pocket it.
Homeowners should be very careful when dealing with any third party company promising to resolve mortgage debts. Only the lender can approve a loan modification or other foreclosure alternative, and there is no guarantee that a homeowner will be approved. Fees for negotiation services should never be paid up front and never until a written letter of approval is received from the lender. The Federal Trade Commission offers homeowners additional resources to better educate consumers about the ins and outs of the mortgage debt relief industry, as well as takes complaints and performs investigations into any suspicions of fraud.