When things get tight financially, it isn’t surprising that people turn to companies that promise quick relief from their money problems. The Huffington Post has a story about a couple who turned to a company who promised to get them a mortgage modification to help save their dream home only to find themselves on the brink of bankruptcy.
Be wary of companies who offer to negotiate a loan modification with your mortgage company. The fact is, you probably don’t need the help. The company in the Huffington Post story charged the couple $3,600 up front for their help. That couple could have used that money to pay their mortgage while they negotiated for a modification themselves. Even the Federal Trade Commission is warning people away from these kinds of companies.
FTC spokesman Frank Dorman said the volume of loan modification scams has significantly increased with the uptick in foreclosures in the past few years.
“While the scams have existed in some form for awhile, as delinquencies and foreclosure filings have risen the opportunity for loan modification and foreclosure rescue scams has increased,” he said. “We advise people to avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company. Many of the complaints received by the FTC include not being able to contact the company after paying for mortgage refinance services, not being able to get their money back and not receiving proper help from the company after paying for services.”
Whether or not the bank would have negotiated in good faith is another issue. But at least the homeowners wouldn’t have found themselves taken advantage of twice.
You can read the complete story here.