Group warns homeowners on loan modification scams
Con artists using various tactics to prey on those with mortgage troubles
The California Association of Realtors is distributing a public service announcement across the state to warn consumers that they are at risk from scammers who offer phony mortgage modification schemes to troubled borrowers.
"Every week, we hear reports of unscrupulous con artists who have taken advantage of unknowing, financially troubled homeowners," said CAR President LeFrancis Arnold. "In most cases, charging upfront fees or payments for a mortgage modification is not just a rip-off. It's illegal."
Especially in this down economy, con artists use many different tactics to prey upon home owners, making the stressful situation of facing foreclosure even more difficult, he added. He cited as an example homeowners who fall victim to these scams by being promised loan modifications and reduced monthly payments in exchange for upfront fees paid to third party operators, which is illegal.
Moreover, there's no need for these services, Arnold said. Working with third party operators may not improve a home owner's chance of payment modification. Furthermore, certain advice that may be provided by these third parties, like stopping mortgage payments, can be extremely detrimental to working with the homeowner's mortgage servicer.
According to the Federal Trade Commission, these scammers review foreclosure notices in newspapers, the Internet and public files to identify potential victims. Ads that scammers place online, on television and in newspapers claiming to "Stop foreclosure now" and offering "money back guarantees" are suspect and should be reviewed cautiously by the home owner, Arnold said.