Although the housing market is in dire straights with pending foreclosures, this is one time where you will need your wits about you to make a clear and sound decision for foreclosure prevention solutions. The marketplace is flooded with scam artists waiting to capture desperate prey that will sign on the dotted line for an urgent loan modification. Be sure you explore all your possibilities at the first sign of financial distress, and follow a few tips to avoid the loan modification scams.
1. No Telephone Prospecting
According to FBI statistics, the loan modification companies that approach the client with a telemarketing call have the highest incident for scamming and identity theft. Never give your personal information to someone over the phone, unless you initiated the call and know who you are talking to. In some cases, the caller may be from a legitimate office, and you may check that by getting their name, address, and phone number. If the office is local to your area, you may wish to pay them a visit, rather than doing business over the phone.
2. Read The Fine Print
Before signing any document, be sure to ask many questions until you are fully satisfied with the answers. Unscrupulous loan modification providers often slip a notation at the bottom of the contract that requires a hefty non-refundable deposit or retention of the up-front payment. Some states, such as California, does not permit the loan modification company to cash the client’s check until the services are completed with success. The Department of Real Estate mandates that each firm hold the client funds in a trust account until the loan modification is complete. In such cases whereas the loan mod could not be performed, the DRE ensures the client will get a 100% refund. Check with your state board of real estate for laws and restrictions to protect the consumer, and only do business with loan modifications firms that comply.
3. Check Credentials
Before entering into contract with a loan modification firm, be sure to check for a business license and any track record of complaints. The Better Business Bureau offers online services to gather information on a company and such free services can save you time, energy and money in the long run. If you are in doubt over a loan modification firm, see your local real estate or loan broker for some options. The loan professionals are licensed by the state and subject to disciplinary action should they be negligent in their duties. However, many of the loan modification companies that are not tied to a real estate office have sprung up from nowhere and have no proven track record of their performance. In some cases, an attorney may be your best option if you believe you will benefit from a bankruptcy, rather than a restructuring on your existing loan.
4. No Guarantees
Although there are many qualified loan modification providers, its important to steer clear of the companies that make false claims and promises. A cunning loan modification representative will tell the anxious clients exactly what they want to hear, irrespective of facts and circumstances. A loan modification firm may assert that they will make every effort to contact a lender to reduce your mortgage payments, however, they cannot make a guarantee of the outcome of their services. If the loan modification rep tries to guarantee that your new payments will be in the price range you have in mind, walk away. Mitigating factors such as credit, new income level and more are applied to each individual case, and not every loan modification applicant may be approved. Your income level must be verifiable that you can handle the new payments, and in such cases as a job loss or income reduction, a new bank may decline the loan.
The Department of Urban Development, HUD, has an informative website to educate the distressed homeowner with mortgage counseling, loan modification services and preventive measures to avoid foreclosure. Each state is represented on the site, although procedures and policies may vary across the country. Many of the HUD services are free or offered at a nominal fee, and can be trusted to put the homeowner in contact with internal or external support services.
About The Author
Joe Cline writes articles for Austin real estate. Other articles written by the author related to Lakeway real estate and Austin TX realtor can be found on the net.