An unfortunate side-effect of the foreclosure epidemic is a rise in mortgage modification fraud. As the housing market has plummeted, scam artists have been able to convince desperate homeowners to pay a fee in exchange for false promises of lowering their mortgage or monthly payments.
Under the U.S. Home Affordable Modification Program (HAMP) there are legitimate funds available to help struggling home owners ward off foreclosures. In fact, the U.S. Government has set aside more than $29.9 billion in foreclosure prevention initiatives (including HAMP). Many homeowners are unaware that it is free for consumers to register for HAMP as well as to seek advice from qualified loan counselors who have been approved by the Department of Housing and Urban Development.
However, scam artists have taken the opportunity to advertise online or in TV and radio ads, have used pseudo-government logos and have adopted official-sounding names in order to swindle struggling homeowners out of money that they don’t have.
According to Oakland County (Mich.) treasurer Andy Meisner, “The last thing a family facing foreclosure needs is a scam artist picking their pockets and making the situation worse, when all they’re trying to do is dig out.”
It’s crucial for homeowners to be vigilant of such scams. Here are five pieces of advice lawyers can give clients to help them diagnose or avoid mortgage adjustment fraud:
1. Anyone who is not an attorney should not be offering loan modification assistance.
2. Look out for anyone charging a fee in exchange for loan modification advice. This sort of advice should be free.
3. Stay clear of anyone using high-pressure tactics to get you to sign a paper or turn over the deed to your house.
4. Anyone asking for large up-front fees will likely take the money and run.
5. Be sure not to make mortgage payments to a company other than your mortgage company prior to their approval.
These scammers are sadly worsening a situation that is already precarious. After being swindled, desperate homeowners have even less money to make mortgage payments and are even closer to defaulting on their loans.
“The ripple effect of this unethical act is enormous,” says Meisner.
Rising incidents of fraud guarantee an influx of criminal and civil mortgage adjustment fraud cases. It can be helpful to seek a real estate expert witness with a thorough knowledge of mortgage law.