Falling behind on a mortgage loan can be risky and terrifying. If you fail to avoid the many mortgage loan modification rescue scams that promise to help, you could lose much more than just your home!
There are both good players and bad actors in the loan modification industry. Spotting a scam before you get burned is essential to saving your home and patching your finances.
What to Look for When Seeking Loan Modification
You will want to look for help from a bona fide charity. Make sure that they are classified as a 501(c)(3) nonprofit charity by the Internal Revenue Service. You will also want to verify that the organization is HUD-approved as a housing counseling agency for both mortgage default and loss mitigation counseling.
Many of these organizations receive federal or state funding to provide a specific program. These programs can help you prevent foreclosure by finding an appropriate solution. The solution may be a loan modification, or it may be one of several other mortgage assistance solutions.
Warning Signs of Loan Modification Rescue Scams
The most obvious sign that a firm is running a morgage rescue scam is if they charge a fee. Fees often run well into the thousands of dollars. They will ask you to pay them rather than send money to your mortgage lender. This is just one example of what consumer advocates classify as “last dollar scams”, in which even intelligent people will take desperate action when they are facing extreme financial hardship.
A firm that makes promises to you is also a likely scam. No entity, including HUD-approved housing counseling charities may guarantee any result. The options available to you depend on many factors, including your financial strength, financial weaknesses, seriousness of delinquency and local factors that may be outside of your (and their) control.
The best bet to avoiding mortgage relief and other loan modification scams is to contact your lender directly. They can refer you to a HUD-approved housing counseling program that could help you receive the education and tools you need to find a workable solution that your lender may agree to.