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Beware of Mortgage Modification Scams

The FBI recently reported that they have more than 2,100 pending investigations into mortgage fraud.

Unscrupulous companies are targeting homeowners who are struggling to make their mortgage payments.  We have all heard about the billions of dollars Congress approved in the bailout.  Hand-in-hand with that, we hear about the debate in Congress to provide relief that will help homeowners keep their homes and avoid foreclosure.   That has led to the rise in scammers who prey on homeowners that are desperate for help with their mortgages.

Typically, the company solicits homeowners who are facing foreclosure by offering their “services” to help them keep their homes.  There is always an up-front fee required, often several thousand dollars, and many of the scammers give the false impression they are affiliated with the federal government.  Some of the scams offer to start the process of a loan modification program.  At best, the work might actually be completed by the group receiving the money, even though many agencies will provide the same or better services for free.  Sadly, though, many consumers have scraped together the fee, never to hear from the company again.

Laurie Maggiano, senior policy adviser at HUD’s Office of Housing, wants homeowners to know that there are many non-profit agencies who will help homeowners for free.  The department has certified 2,300 nonprofit housing counseling agencies across the country, which are required have at least one year of experience administering a housing counseling program.

The US Attorney General, Eric Holder, recently announced the conviction of defendants in Kansas who solicited homeowners facing foreclosure and then filed fraudulent bankruptcy petitions on their behalf.  Other states are prosecuting similar actions, including many that have induced homeowners to transfer an interest in their homes to a fictitious buyer, who is already in bankruptcy, in the promise of invoking the automatic stay.  Instead of protecting their homes, these owners are finding that their homes are snarled in civil litigation for years and many end up losing the very thing they were fighting to save.

If your home is in danger of foreclosure, seek the advice of a licensed attorney.  Bankruptcy will stop foreclosure and an attorney will use Federal Bankruptcy laws to legally protect you and your property.

And always beware of anyone who contacts you to offer their services, requiring a fee up-front before providing any services.   A legitimate attorney will not call your home but will rely on advertising to let you know what services they offer.  The first step in protecting your home starts with you when you decide to call an attorney for help.