Avoid Mortgage Relief Scams

Behind on your mortgage and looking for help? Check out these tips and learn how to avoid mortgage relief scams.

The possibility of losing your home to foreclosure can be terrifying. The reality that scam artists are preying on desperate homeowners is equally frightening. Many companies say they can get a change to your loan that will reduce your monthly mortgage payment or take other steps to save your home.

Some claim that nearly all their customers get successful results and even offer a money-back guarantee. Others say they’re affiliated with the government or your lender and still others promise the help of attorneys or real estate experts.

Unfortunately, many companies use half-truths and even outright lies to sell their services. They promise relief, but don’t deliver. In fact, many of these companies leave their homeowner customers in worse financial shape.

If you’re hiring a company to stop foreclosure or reduce your mortgage payments, here are some things to keep in mind:

• Don’t pay an up-front fee. Unless they’re attorneys following specific rules, it’s illegal for companies to charge you until they’ve negotiated a loan modification and you’ve accepted it. So, don’t pay them until they fulfill their promise.
• If a company claims attorneys will be helping you, check it out. Make sure they’re licensed to practice law in your state. Some companies falsely claim to be working with attorneys to get your business and charge fees in advance.
• Beware of companies that tell you to stop contacting your lender. You should always feel free to contact your lender directly to see whether they can offer you additional options. Companies that tell you otherwise are breaking the law.
• Find free, reliable mortgage assistance. To contact a free, HUD-approved housing counselor, visit the U.S. Department of Housing and Urban Development or call the Homeownership Preservation Foundation‘s national 24/7 toll-free hotline, 888-995-HOPE. An independent, non-profit counselor can help you understand your situation, identify your options, and try to find an alternative to foreclosure.

 
If you’re looking for a loan modification or other help to save your home, avoid any business that:

• guarantees to get you a loan modification or stop the foreclosure process – no matter what your circumstances;
• tells you not to contact your lender, lawyer, or housing counselor;
• claims that all or most of its customers get loan modifications or mortgage relief;
• asks for an upfront fee before providing you with any services (unless it’s a lawyer you’ve checked out thoroughly);
• accepts payment only by cashier’s check or wire transfer;
• encourages you to lease your home so you can buy it back over time;
• tells you to make your mortgage payments directly to it, rather than your lender;
• tells you to transfer your property deed or title to it;
• offers to buy your house for cash for much lower than the selling price of similar houses in your neighborhood; or
• pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

 
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).