Real Estate Articles

Be on alert for loan modification scammers

The Financial Crimes Enforcement Network, a U.S. Treasury Department agency, reported the number of mortgage fraud reports filed with the government rose 31 percent in the first quarter of this year. The Lawyers' Committee for Civil Rights Under Law's national Loan Modification Scam Database, also reports as of July 11, 2011, homeowners nationwide have reported over $40 million in losses from fees paid to fraudulent and deceptive "rescuers."Complaints submitted to the committee since February 2010 reveal older Americans are among the hardest hit by these scams, reporting losses of over $16 million dollars.

These scammers prey on distressed homeowners who are delinquent on their mortgage, on the brink of foreclosure, or in foreclosure with offers of financial counseling or false promises of being able to save their home from foreclosure by providing loan modification assistance for a fee. Many of these companies or individuals seek out distressed homeowners by searching public records to identify properties where a Notice of Default has been filed.

These scams are not always easy to spot, but it helps to know the warning signs. The Silicon Valley Association of REALTORS® provides the following six red flags identified by Loan Modification Scam Alert, a national public education campaign, to indicate that you may be dealing with fraud:

• A company/person 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.
   
• A company/person 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.
   
• A company/person 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.
   
• A company 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.
   
• A company 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.
   
• A company/person you don't know 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.

To report a scam by telephone call: 1-888-995-HOPE or to report a scam at http://www.preventloanscams.org/

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please email or call the SILVAR office at (408) 200-0100.

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