Bad news: It could be worse
Don't get hit by a scam.
It’s cruel, but true: Scam artists view struggling homeowners facing foreclosure as money-making opportunities.
There are lots of organizations out there right now trying to help modify loans for people who can’t keep up with their mortgage payments. Unfortunately, there are con artists out there imitating these helpful sources, and they don’t care if you end up homeless.
Don’t get eaten
I think Angie Moreschi of the Consumer Warning Network sums it up well:
“You’ve got that $75 billion out there in housing aid, and that’s going to bring the scam artists out of the woodwork. They are going to be like piranha circling the kill.”
So beware, and watch out for these scams:
1. Phantom help
The FBI has identified three basic types of scams, and this is the first. In this scenario, fake mortgage rescuers promise help, charge a fee and run off with the cash. Usually the scammer is never heard from again, and the mortgage, of course, remains unchanged.
2. Bailout scam
In a couple of scam scenarios, the con artists could end up owning your house. In a bailout scam, scammers will ask you to surrender your house title to them. The con artist says the homeowners can rent the house until the mortgage is “fixed” and then repurchase it.
3. Bait and switch
No one likes reading through mounds of paperwork, but if your house is on the line, it’s time to buckle down. In a bait and switch scam, the con artist dupes homeowners into signing away the deed to their house by telling them they are signing mortgage modification papers.
What to avoid
Make sure you have a trusted, qualified source review your paperwork.
If a mortgage relief agent asks for fees up front, this is a huge red flag. Don’t pay until the work is done. Don’t hand the deed to your house over to someone. Always have an attorney or other verifiable, legitimate counsel read over your documents. Hiring a lawyer may be expensive, but it’s not as expensive as losing your house.
Necessity is the mother of invention, and sometimes hard times produce even worse crooks. It’s almost as bad as the punks who keep e-mailing people from “foreign consulates” with money for you, or Bill Gates giving away millions. Spam never ends.
People in trouble with their mortgages should find free professional consultation. Mortgage modifications can often only be done once or have limitations on use. A successful modification with the best possible outcome requires careful preparation. A homeowner must show a viable case for modification to be considered. They must have detailed information on debt to income ratio and budget planning. Find out what it takes to qualify before you approach your bank. Carefully prepare you documents for submission to the bank. You are preparing to take advantage of a clause in the mortgage contract.