Foreclosures levels are quite high still now. As a result, those home-owners who are facing foreclosure remain quite stressed and scared. This makes them vulnerable and they fall prey to scams easily. Various non-profit organizations and government agencies are working together to notify consumers of the danger of mortgage relief scams and how to avoid them.
Quite a large number of mortgage scammers have been arrested. However, there are many more scammers who are trying to take advantage of home-owners' financial woes. Here are some examples of common mortgage relief scams and ways to avoid them.
Scammers pretending as government counsellors
A large number of people have been scammed in the name of Home Owners Protection Economics Inc., or HOPE, mimicking the name of HOPE NOW. Scammers used to pose as government counsellors or a representative of the lenders and scam people by telling that the home-owners have been approved for a loan modification under the Home Affordable Modification Program, or HAMP. They demanded an upfront fee for their services. These types of scammers will typically ask for fee of around $1,000 to $5,000 from the home-owners. It should be noted here that the paperwork for a loan audit can look legitimate, but consumers can avoid scams by pro-actively contacting a local HUD-approved housing counsellor through the HUD website.
Scams guaranteeing money-back
There are certain scammers who will guarantee you money back in case you go for their services and pay them an upfront fee. In the end, the scammer will take away the money from the homeowners and the hapless people will even lose their property. Home-owners should never pay a fee for loan modification assistance. It should be noted here that Government and non-profit housing counsellors provide this service for free. Moreover, once you go for a service, there will be hardly any money back.
Scam asking homeowners to stop contacting the lender
In addition to requiring upfront fees in exchange for loan modification assistance, some of them even ask the home-owners to avoid contacting their lenders. They told that home-owner that they could get a better deal. But in the end, the home-owners lost their money and the property in foreclosure.
Thus, you should beware of anyone who tells you to stop contacting your lender. You should always talk to your servicer directly.
Scam due to misrepresented attorneys general settlement
After the attorneys general settlement with the 5 top mortgage lenders, a new type of scam emerged. A group of people started calling the home-owners and said that they represent the lender. They ask the home-owners to pay them $500 or more to facilitate the home-owners getting money from the settlement.
Apart from that, a new scam involved certain people calling the home-owners to tell them that they are from a government agency with information about the mortgage settlement. The caller asks for a bank routing number or other personal information in order to help you get the refund but then ultimately they drain the bank account.
In order to save yourself from this scam, you should never give out personal financial information to anyone. Also, you shouldn't pay a fee for housing counselling.
Mass joinder scam
It should be noted that fake and even legitimate law firms send notices to home-owners informing that they have been wronged by the lenders. The mail even states that the home-owners may be eligible for compensation. They claim that they are filing a lawsuit and ask the home-owners to become a part of the lawsuit by around $2000 or more. In most cases, though they file a lawsuit on the home-owner's behalf but it gets kicked off the court due to unavailability of evidences.
Thus, in order to save yourself from such a scam, you should never pay a fee to become part of a class-action lawsuit. Always remember that no one can guarantee you foreclosure prevention or a loan modification.
How to report a scam:
When you understand that you have been a victim of a mortgage relief scam, you can contact one of the following agencies to report it:
- HOPENOW.com or (888) 995-4673
- MakingHomeAffordable.gov
- BBB.org/us/scam-source.
- FTC.gov or call (877) 382-4357
- PreventLoanScams.org or call (866) 459-2162
- Sigtarp.gov/contact_hotline.shtml#theform or call (877) 744-2009
It is very important to report a possible scam and the borrowers should be careful enough to tell their servicers immediately about being scammed. This may help them stop foreclosure actions.