REALTORS® are warning consumers that they are at risk from scammers who offer phony mortgage modification schemes to troubled borrowers, especially at this is a time of year when consumer scam attempts are prevalent.
"We are encouraging every TV and radio station in California to air this important public service announcement," said C.A.R. President LeFrancis Arnold. "Every week, we hear reports of unscrupulous con artists who have taken advantage of unknowing, financially troubled homeowners. 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. Homeowners who fall victim to these scams are promised loan modifications and reduced monthly payments in exchange for upfront fees paid to third party operators, which is illegal. Working with third party operators may not improve a homeowner's chance of payment modification and may actually be detrimental to working with the homeowner's mortgage servicer.
Scammers have been known to 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.
"The Silicon Valley Association of REALTORS® joins the California Association of REALTORS® in warning distressed homeowners about foreclosure-related scams. If an offer seems 'too good to be true,' it probably is, so please don't fall for it," said Gene Lentz, president of the Silicon Valley Association of REALTORS®.
Below is information on how to avoid mortgage modification scams, from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Consumer Financial Protection Bureau, and the U.S. Department of the Treasury:
• Only your mortgage servicer has discretion to grant a loan modification. No third party can guarantee or pre-approve your HAMP (Home Affordable Modification Program) mortgage modification application.
• Beware of anyone seeking to charge you in advance for mortgage modification services. In most cases, charging fees in advance for a mortgage modification is illegal.
• Paying a third party to assist with your HAMP application does not improve your likelihood of receiving a mortgage modification. Beware of individuals or companies that ask you for payment and tout success rates or claim to be "experts" in HAMP.
• If an individual or company claims to be affiliated with HAMP or displays a seal or logo representing the U.S. government in correspondence or on the web, you should check the connection by calling the Homeowner's HOPE™ Hotline at 1-888-995-HOPE (1-888-995-4673) or visit www.MakingHomeAffordable.gov.
• Beware of individuals or companies that offer money-back guarantees.
• Beware of individuals or companies that advise you as a homeowner to stop making your mortgage payments or to not contact your mortgage servicer.
Financially troubled homeowners can avoid scams by working with a HUD-approved housing counselor to understand their options and to apply for assistance. Assistance from HUD-approved housing counselors is free, and homeowners can reach them by calling the Homeowner's HOPE™ Hotline at 1-888-995-HOPE (1-888-995-4673).
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.