Since the mortgage crisis began in 2008, many government programs have been created to help struggling homeowners. Unfortunately, there are also scam artists trying to take advantage of people who may be behind on their mortgages and are looking to avoid foreclosure.
Many new companies have sprung up, calling themselves things like “loan modification consultants” or “foreclosure consultants”. They charge hefty fees up front, then provide no genuine assistance to the homeowner. In some cases, scammers will give homeowners a new address to send their mortgage payments to, where the scam artist collects the payments and disappears after a few months
Another scam that has been observed is a title transfer scam. The foreclosure rescue company tricks the borrower into signing the title over to them. While the homeowner is told that s/he will get the title back at the end of the process, they actually end up living as a renter in their own home, and could be evicted at any time by the scam artist or through foreclosure by the original lender/servicer.
As a HUD-approved nonprofit housing counseling agency, credit.org wants to help homeowners in trouble get the help they need without falling prey to any scams. Here are some tips to make sure you avoid the scams mentioned above:
- Do not pay up front. Avoid any consultant who charges a fee before providing any service.
A HUD-approved housing counselor provides foreclosure prevention counseling services at no cost; the “Making Home Affordable” plan is completely free to the homeowner. We’re heard of scammers charging fees ranging from $300 to $3,000. True nonprofit housing counselors won’t charge hundreds or thousands of dollars to help you.
- Be wary of sending your mortgage payment to a new address.
The payment address may legitimately change if your mortgage company is absorbed by a larger financial institution, or if you refinance your loan with a new company. In most other cases, though, your mortgage payment should go to the same place it always has. Be skeptical of any foreclosure prevention expert who asks to change the payment address of your mortgage. Call your mortgage company yourself and verify where the payments should be sent.
- Don’t sign anything you don’t understand fully.
Read the paperwork carefully and verify it says what the consultant tells you it says; in particular, you shouldn’t be asked to sign your property over to a foreclosure consultant as part of a mortgage rescue. Be careful not to sign anything with blanks or spaces designed to be filled in later by the consultant.
- Work with a HUD-approved nonprofit housing counselor.
We recommend looking for HUD approval, which can be verified by visiting HUD’s web site at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. You can also call HUD at 877-HUD-1515 to learn more. Better Business Bureau membership is a plus, and you can obtain a Business Reliability Report on any business or industry (regardless if they are a member or not) at bbb.org.
- Rely on trusted sources for information. Find internet-based information about the legitimate mortgage rescue plans that are available to help homeowners at http://www.makinghomeaffordable.gov/ or visit the Homeownership Preservation Foundation at http://www.995hope.org/. And of course, a HUD-approved housing counselor and your lender/servicer can advise you directly and answer all of your questions.
For free, on demand, HUD-approved housing counseling, call credit.org today or visit www.homeownership.org. Wherever you are in the homebuying or foreclosure process, a certified counselor can help you know your rights, avoid scams, and find mortgage relief.