For homeowners who are struggling to pay their mortgage, the Making Homes Affordable program offers alternatives to foreclosure or short sale. Struggling borrowers find this a great alternative and a great way to not lose their house. Unfortunately, it is also a hot topic for scam artists and other financial predators. When a person is in the situation where they are potentially losing their home, they are wrought with emotion. Emotions often trump logic and give predators an opening to strike. To help the consumer fight against predators SIGTARP, CFPB, and the Treasury have formed a joint task force to combat these scammers, and provide valuable information to those who might find themselves looking toward a modified loan.
The Home Affordable Modification Program (HAMP) offers many ways for a home owner to keep their home in troubling times. They offer loan modification, rate modification, and other ways to help those who are struggling. The program is a great benefit to a substantial number of those who would otherwise face foreclosure, but it is also fertile ground for scam artists who know how to play a consumer’s weakness.
Being aware of financial predators is the first step toward protecting oneself. The next is to know the key characteristics of mortgage modification scams.
– The first thing the consumer should know is that only their mortgage servicer can modify a loan. If a third party offers the modification, they most likely are not legitimate.
– Any company that charges a fee in advance of a home modification is suspect. Most advance fees are illegal.
– Using a HUD approved housing counselor is always free.
– There are no money back guarantees. If one is offered, a flag should go up.
– If a company actually advises to stop making mortgage payments, or offers anything else that is too good to be true, stop the process and consult a housing counselor.
– Any third party claiming to represent HAMP should be checked out by calling the HOPE hotline.
– Full list here.
Prevention is always the best way to combat mortgage modification scams. An informed consumer is a powerful consumer. By being aware of the scams, and what to look for, even those acting solely on emotion can avoid huge problems. The unfortunate effect of these mortgage modification scams is that the homeowner will often lose a substantial amount of money as well as their house. But the chain effect does not stop there, the legitimate companies are hurt, and the overall economy will take longer to recover due to the greed of a few unscrupulous people. Before making any rash decision, the borrower should call the Homeowner’s HOPETM Hotline at 1-888-995-HOPE (1-888-995-4673) to speak with a housing counselor.