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How Do Loan Modification Scams Work?

Most of the time, people in debt are warned about debt settlement or credit rehabilitation scams, both of which can cost force them to file New York bankruptcy. However, there are many other ways con artists try to get honest people, one of which is especially troublesome since the housing bubble burst several years ago: loan modification scams. What are these?

Generally, a loan modification scam involves a con artist who targets underwater homeowners who are trying to modify their mortgages to reduce their monthly interest payments. Usually, the scammers tell homeowners that they can arrange modifications through the government’s Home Affordable Modification Program (HAMP), but they insist on an upfront fee, which is usually the tipoff to most scams.

Here are some other things to look for:

  • Web sites that aren’t “.gov” pages. HAMP is a federal government program whose legitimate Web site can be found here. Scammers will try to set up their pages to sound official like the government’s but end in “.com” or “.org,” etc. Also beware anyone who displays a government logo but isn’t directly affiliated with the government.
  • Aside from demanding upfront fees before they claim they will give you a modification, they may also charge an “administrative fee” to negotiate with your lender on your behalf, which they never do. They might also call this “counseling.”
  • Sometimes loan modification con artists trick people by claiming they can provide government-approved loans. However, loan modifications can be obtained directly from the government but must require the lender’s permission.
  • Don’t trust people who say they’ve got things under control and not to contact anyone else like a lawyer or the government. Part of how scams work is by isolating people from other potential avenues of help.
  • Similarly, don’t trust someone who guarantees he or she can stop a foreclosure, asks for the deed to your property, or tells you to cease mortgage payments.
  • Finally, don’t sign complex paperwork if you don’t understand it.

If you’re having problems paying down a mortgage, then go through the government or negotiate directly with your lender to get a modification. Bankruptcy and other options can provide relief to homeowners, and experienced New York bankruptcy lawyers can help you choose the best one.

For answers to more questions about mortgage modification, bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

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