At the request of the Federal Trade Commission, a U.S. district court recently halted a nationwide loan modification scam operating from the Dominican Republic – but pretending to be in Chicago.
How the Scam Worked
Promises of Modification, But Must Pay A Fee First
Speaking in Spanish and targeting homeowners behind on their monthly mortgage payments, the telemarketers would empathize about tough times and promised mortgage modifications in 30 to 90 days for a one-time advance fee of $995 to $1,500. The callers often promised that when the loan modification was finalized, the homeowners’ lenders would forgive any past-due payments and late fees.
Homeowners who signed up received a batch of forms in the mail that required them to provide extensive personal and financial information and to pay the advance fee.
After Fee Paid, No Contact From Company
After paying the fee and not hearing from the individuals for weeks, some homeowners who were able to reach a live person were told that the modification process was underway, but they need to pay up to several thousand dollars in additional fees.
In the end, the Federal Trade Commission says, few homeowners got any loan modification – or anything else of value from these individuals. And what they did receive, they could have gotten for themselves for free.
More information from the Federal Trade Commission regarding this scam: http://www.ftc.gov/opa/2012/07/freedom.shtm
Protect Yourself from a Loan Modification Scam
Be careful when dealing with companies in other states. If you do business with a company outside Washington, and they do not perform as promised, your only ability to seek damages may be a private lawsuit against them.
Warning Signs of a Possible Loan Modification Scam
- Company operates out of state
- Company is not licensed with DFI
- Company claims license is not required because attorneys are involved
- Out of state attorneys are not licensed to practice in Washington
- Money is required upfront before any paperwork is reviewed or signed
- Company tells you NOT to contact your lender
- Company requires direct access to your bank account or credit card