Homeowners Beware: Work Directly with Your Mortgage Lender.
Posted on | April 8, 2009 |
A reader picked up a warning on CBS Morning News and wants to share it with all WHN readers.
Hello WHN.
CBS reports that there are nine million homeowners who are behind in their payments and/or are facing foreclosure.
Unfortunately, some of these individuals are falling for refinancing scams and are losing everything from money to the title to their home.
Ads are running across the country placed by illegitimate companies with legitimate-sounding names such as Federal Loan Modification in CA and Home Assure LLC in FL. The FTC has sent at least 71 warning letters to companies they deem suspicious.
- WHN TIP: Check the legitimacy of any company offering to assist you with your mortgage modification by researching them thoroughly. The Internet is a great resource. Enter the name of the company and the word “scam” in Google. For guidance go to http://www.ftc.gov. Go to Consumer Protection. Select Credit and Loans. Then, click on Mortgages and Real Estate. There are links to legitimate sites as well as a wide array of helpful tips on this website.
CBS reports that there are at least three scams that are “gaining traction” now.
Phantom Help: Posing as a “mortgage modification or foreclosure prevention specialist” you may be counseled to pay them anywhere from $500 to $5,000 upfront and they promise to negotiate with your lender and take care of everything for you. Often, you will be told not to speak with an attorney, your lender or a debt counselor while they “negotiate for you”. In the end, they walk away with your money and go on to the next victim.
Rent-to-Buy Scheme: This scam is extremely dangerous. You are told that your credit is bad so your best bet is to surrender the title to someone who is more credit-worthy while they secure financing for you. In the meantime, you pay rent while you await financing to buy your home back. The “financing” terms turn out to be completely outrageous and out of your reach. You have now lost your home.
Bait and Switch: This involves an overwhelming amount of paperwork that many people are neglecting to read. You are told that you simply need to sign the papers and the company will complete them for you. There is a lot of pressure to move quickly. In actuality, you are signing over the property and not applying for a new loan.
- WHN TIP: Do not go through a third party when negotiating with your lender. Work exclusively with your lender. You should not be required to pay upfront fees beyond their normal processing and appraisal costs. Be wary of the terms behind any fees. Be certain that you understand anything you are asked to sign. You might want to consult a real estate attorney if you have any doubts.
To read all of the information from the CBS Morning News story that aired April 7, 2009 along with related features, click here: http://www.cbsnews.com. Go to Morning Show and search the key words “mortgage scams”.
The bottom line is to work directly with your lender and start early. If your income has been affected by a lay-off, disability, etc., contact the lender long before you begin having problems paying your mortgage.
Thanks for the tips!
If you have questions, comments or advice, email me; Leann (at) WhatHappensNow.com.
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One Response to “Homeowners Beware: Work Directly with Your Mortgage Lender.”
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August 17th, 2009 @ 4:23 pm
These are great tips you have put together Leann. There are a lot of not so reputable companies out there. It is important for homeowners to have all the facts. I am sure they appreciate the info if they did not watch the CBS News.