With the national foreclosure rate persistently high, Virginia’s residents are still feeling the effects of the foreclosure crisis. Unfortunately, many homeowners have turned to loan modification or foreclosure “rescue” companies for help—only to realize that they’ve been scammed. Anyone can become a victim of a loan modification scam. Often, homeowners dealing with foreclosure are so desperate to find a solution and avoid foreclosure that they end up being taken advantage of by scammers. For example, many scammers promise vulnerable homeowners that they can definitely stop a foreclosure or save your home. Under FTC guidelines, no one should ever make this kind of guarantee. The best way to avoid a scam is to know the signs. In some cases, even trusted professionals like real estate agents or attorneys have been involved in loan modification scams!
While the tactics of loan scams continue to change, there are some themes that homeowners should be aware of. Scammers will often tell homeowners facing foreclosure to stop paying their mortgage. Instead, scammers recommend that you use the money you would put towards making payments to pay the scammer’s fee. Scammers also tell homeowners that they must be behind on payments to get a loan modification. This is not true! You can work with your mortgage company at any time to get a loan modification.
To gain credibility, some scammers will claim to be affiliated with government programs, and will charge a large upfront fee for services. Remember, unlike scammers, HUD approved housing counseling services will never charge a fee. While the scammer’s website may use language found in government assistance programs, they will not have a .gov web address! Instead, their website will end in .com, .net, or .org. A website ending in .org does not automatically make the company trustworthy! Scammers will often employ the use of the .org designation to give homeowners a false sense that the organization is a nonprofit. Make sure you contact your lender first. Your lender will be able to tell you which government programs you qualify for to avoid foreclosure.
Another way that scammers attempt to gain credibility and your trust is by creating a legitimate-sounding title. Again, loan modification scams change all the time. However, there are some common titles that you should be aware of. Possible titles of scam artists include:
- Loan Modification Consultant
- Forensic Loan Auditor
- Mortgage Loan Auditor
- Foreclosure Consultant
- Foreclosure Prevention Specialist
- Mortgage Consultant
- Short Sale Negotiator
Don’t fall for these phony credentials! Seek out HUD approved housing counselors in your area to help you navigate the foreclosure process or work directly with your lender. You lender or housing counselor can help you to avoid scammers.
If you are scammed, remember that you are not alone! Many people have been scammed by loan modification scammers. If you have been scammed, you can and should take action against your scammer. You can report a loan scam by filing a complaint online through the Loan Scam Prevention Network. Every day, loan modification scams rob people of their money and their homes. Fighting back and reporting scams is key to stopping scammers!
If you’re facing foreclosure or behind on payments, HOME may be able to help you. Contact us at 804.354.0641 for information.