March 24, 2010

Recognizing Loan Modification Scams in California

Posted in Loan Modification tagged at 6:39 pm by demetriagraves

There has been a lot of media attention recently on the increase in scams regarding loan mods. Unfortunately, those who are most likely to be targeted are the elderly, anyone entering foreclosure, people who have recently lost their jobs, families who have lost a loved one, people who have limited knowledge of English, people with limited resources, and homeowners whose payment amounts have recently been raised.

You need to read this, even if your home is safe. A friend or relative who is not so fortunate may come to you for advice, and this will help save their home and your friendship!

The moment someone enters foreclosure, it not uncommon for them to be inundated with offers of help from many individuals with important, legal or governmental sounding names, some even claiming to have references from neighbors and nearby churches.

The person who will approach you in this type of scam is, more often than not, well-dressed, well groomed, and seems personable, kind, and trustworthy. Some will put you at ease by representing themselves to be of the same religion, to have been in the military, and others will claim to be working for non-profit organizations, or even some branch of the government.

These are some of the most common scams and what you can do to avoid being a victim.

1) The Disappearing Foreclosure Consultant – With a helpful sounding name and armed with references and a kind voice, the person who contacts you promises to help you stave off foreclosure with just an up-front fee for their time. The only problem is, as soon as the check clears their bank, you never see or hear from them again. The soon-to-be phantom performs little or no service, takes your money and you are left with your original problems and less time to try to save your home from foreclosure.

2) Loan Modification Helpers – Unlike Santa’s Helpers, in this scam you pay a fee up front to the “loan modification expert” to negotiate directly with your bank, only here you don’t get a present from Santa. If the expert really gains your trust, you also make your mortgage payments directly to the expert rather than to the mortgage company. Both the up front fee and the mortgage payments go directly into the pocket of the loan modification helper with the white beard and the kind voice and by the time you receive notice that your house is in foreclosure, this elf has disappeared and is back at the North Pole.

3) Just Sign Here Scams – As you face the prospect of foreclosure, one offer of help seems far better than all the others because it allows you to stay in your home as they save it from foreclosure. Unfortunately, in the papers you sign without having a lawyer look at them, you agree, knowingly or unknowingly, to sign over the ownership of the house and still remain responsible for the mortgage payments. This person either then sells your house, collects other fees from you or holds onto the house and evicts you.

4) Sale and Leaseback Scams – In this scam, if you are a homeowner who still has some equity in your home, you will be convinced to sign over title in your home and pay rent to the scam artist with the promise that they can bail you out, cure your problems and that you will be allowed to buy back the house later at a bargain price. All of this can be accomplished, but only if the property is in the consultant’s name. The payments you make go directly to the scam artist and eventually you will find yourself holding the bag. You may also find yourself evicted when you can no longer make the excessive rent payments. If you have lost your job and are having trouble making your house payments, even if you have equity in your home, you may be tempted by this scam. And while you would be entitled to the excess equity in your home if the house is sold in foreclosure, when you fall victim to this scam, you will lose the equity when it is either sold out from under you or the equity is stripped away by the new owner.

5) The Trust Me, I’m Religious or I Was In The Military Too Scam – These people posing as Christians, former members of the military or members of whatever social organizations you belong to come complete with references from members of your church or with military haircuts and promise that by adding them to the title to your home, they can rescue you from foreclosure, and have your credit repaired. Having gone through your mail or your trash, they probably know all about you. There’s no need to see a lawyer, they tell you. Just pray with them or have a drink with them and swap military stories. Just be sure to hold on to your wallet, don’t give them any money and don’t sign anything.

6) Sign Me Up Scotty And Get A New Loan Scam – In this scam, you are told that if you add the nice looking Good Samaritan onto your title by signing a Grant Deed or other legal instrument, (which you are told, you don’t really need to read) this friendly person can apply for a new loan, which, unfortunately, if approved, will leave you on the hook for both the old loan payments and the new loan payments, and any up front fees you pay for this service will disappear with this fraud.

7) Buy My Books, Take This Seminar And Make Millions Scam – You may see this offer on late night television, on roadside signs or even on billboards. Only this time, you are talked into buying materials that are full of worthless information that will do nothing to help you avoid foreclosure. Even worse, the materials you receive may offer advice that will land you in jail by telling you how to approach others in foreclosure and advise them that you can save them from foreclosure. The trouble is, what you will be doing is either practicing law without a license or acting as a credit repair agency or loan modification expert without a real estate license and without an advance fee agreement approved by the Commissioner of the California Department of Real Estate and without being registered with the California Department of Justice.

8)The Short Sale Scam – In this scam, the “short sale specialist” who contacts you promises his expertise to accomplish a short sale in a small amount of time that will protect your credit. There is a fee of course that would have been better spent on groceries. When the real estate market was better, there were additional wrinkles to this scam that today are more difficult to perpetrate due to the difficulty of selling homes in this economy.

9) It’s Like Magic – Here the homeowner is told to sign one thing, but the homeowner winds up signing something else altogether. In some instances of this bait and switch scam, the scam artist will serve as the notary as well. In conjunction with this and other scams, or in other variations, forgery may be utilized, and identity theft could be employed as well.

As you can see from the above examples, the current financial crisis has brought a lot of scammers into the loan modification, short sale and foreclosure arena and you really need the expert advice of an experienced attorney. I always apply the old saying of, “If it sounds too good to be true then it probably is!” I offer a free confidential initial consultation, where you can get your questions answered and I can help put you on the right track, so you don’t end up a being a victim.

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