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Friday, July 25, 2014

Loan Modification Scams – How to Spot One

DFI recently filed actions against two companies for operating unlawful mortgage rescue or loan modification schemes.

See press release from DFI:

The scams tricked consumers into paying large upfront fees but did nothing to help them stay in their homes and avoid foreclosure.
The actions are part of a joint federal-state sweep by the Consumer Financial Protection Bureau, the Federal Trade Commission and 15 states targeting scam operations that prey on delinquent homeowners or those facing foreclosure.
Homeowners looking to modify their loan should keep their guard up and be able to recognize the warning signs of a loan modification scam.
Warning Signs of a Possible Loan Modification Scam
  • Company is not licensed with the Washington State Department of Financial Institutions
  • 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
  • Claims that a modification is guaranteed
Federal law bans law firms from requesting or receiving payment from you for help obtaining foreclosure relief.