Baltimore Homeowners Need to Beware of Loan Modification Scams
While the economy appears to be slowly improving in some respects, many homeowners continue to struggle to pay their mortgage because of unfavorable ARM loans, negative equity, job loss and other adverse economic or personal factors. While a Chapter 7 or Chapter 13 bankruptcy might halt a foreclosure sale and provide a viable financial option for saving your home, many property owners fall for loan modification scams in an attempt to avoid bankruptcy. Although there are legitimate loan modification programs, the vulnerability and desperation of those facing foreclosure has given rise to a multitude of shady businesses that exploit distressed homeowners. Loan modification scams are on the rise because many people do not understand the loan modification process and fail to consult with an experienced Baltimore loan modification attorney.
Although there are a significant number of inappropriate practices and warning signs that can tip homeowners off to a scam. One of the most common red flags homeowners need to recognize is a request for upfront payment for mortgage relief services. The Federal Trade Commission’s Mortgage Assistance Relief Services Rule establishes certain prerequisites before a business offering loan modifications or foreclosure rescue services can collect a fee. Loan modification services must provide a written offer from the lender or mortgage servicer that the consumer decides to accept before any fee is paid. The party receiving a loan modification also must be provided with a written summary of significant changes to the loan terms.
Despite this rule, many unethical scammers are still able to extract a fee in advance because homeowners are deceived by misleading radio and television advertising. Our Baltimore loan modification lawyers have provided some tips to help homeowners and users of physician loans looking for legitimate foreclosure solutions avoid scams:
- Refuse to work with any service that requires you to pay an advance fee to negotiating refinanced terms, modifications or a mortgage work out
- Exercise caution if the company instructs you to send payments directly to its office rather than the lender
- Avoid guarantees from individuals and companies indicating they can obtain a modification or terminate a foreclosure
- Consider working with a loan modification attorney who is licensed by the Maryland State Bar Association. Advantages to working with an attorney licensed by the state bar include the fact that attorneys are forced to adhere to strict ethical rules that go beyond obligations imposed by law.
The organization referred to as Neighbor Works America recently produced a report indicating that $93.6 million has been lost by homeowners in loan modification schemes. The average size of the loss was $3,287.
At the beginning of this summer, the Obama Administration announced that the government’s “Making Homes Affordable Program” would be continued through 2016. While this is good news for qualifying homeowners seeking a loan modification, loan modification scammers will not likely be far behind. Unethical individuals and companies tend to exploit homeowners facing the following circumstances:
- The homeowner is managing to keep the mortgage current but worried about falling behind.
- Homeowners have significant negative equity.
- The borrower is behind on his mortgage payments.
If you need an experienced Baltimore loan modification lawyer who will give candidly explain your options, we invite you to contact us at 866-964-6529. We represent distressed homeowners throughout Baltimore and the surrounding area.