Help Is On The Way

With the national foreclosure rate at an all-time high of 8.85%, NeighborWorks® America is educating homeowners about the warning signs of loan modification scams, a new wave of fraudulent activity connected to the foreclosure crisis. The effort is part of Loan Modification Scam Alert, a national public education campaign launched in October 2009 to help homeowners protect themselves against loan modification scams, find trusted help and report illegal activity to authorities.

“As the national foreclosure rate rises, more and more homeowners are taken in by slick advertising and sales pitches from fraudulent loan modification companies that guarantee to keep them in their homes,” said Ken Wade, chief executive officer of NeighborWorks America .  “Knowledge is a homeowner’s best defense against this illegal activity, which is why we are equipping homeowners with the information they need to minimize their risk and stop scammers in their tracks.  Remember, anyone can be a victim of a loan modification scam, but you don’t have to be.”

Homeowners should avoid any company or individual who:

1.       Asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.

2.       Guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.

3.       Advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.

4.       Pressures you to sign over the deed to your home or sign any paperwork that you haven't had a chance to read, and you don't fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.

5.       Claims to offer "government-approved" or "official government" loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.

6.       Asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.

Homeowners who think they have been the victim of a loan modification scam or know someone who has should call 1-888-995-HOPE (4673) or visit www.LoanScamAlert.org. Both resources also connect homeowners to free, loan modification guidance from a HUD-approved counseling agency.  

About NeighborWorks® America

NeighborWorks® America is a national nonprofit organization created by Congress to provide financial support, technical assistance and training for community-based revitalization efforts. NeighborWorks includes a national network of 235 community-based organizations in 50 states, which strives to create healthy communities through the work of thousands of residents, business people, government officials and other partners.