Be wary of anyone asking you for money up front in exchange for any guaranty or assistance with obtaining a loan modification from your mortgage company.
In November 2009, the Federal Trade Commission announced Operation Stolen Hope, which involved 118 actions by 26 federal and state agencies aimed at mortgage foreclosure rescue and loan modification scams.
At the announcement FTC Jon Leibowitz stated, “These operators targeted consumers who were on the brink of financial disaster, and instead of holding them back, they pushed them over.”
Mr. Leibowitz also advises, “If you’re worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they’ll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.”
There are creative efforts now being marketed by "loan modification" assistance operators claiming there are “almost always” problems contained within the original loan file homeowners may use as leverage to force their mortgage company to modify their loans.
A review of the marketing of one such operator "almost" guarantees they will locate problems in your loan file and the mortgage company will be terrified if they are exposed.
The observed marketing focuses on "forensic auditing", with an included offer to negotiate the loan modification (or short sale) "for free" with the servicer. The proposed fee for the “forensic audit” is approximately $2,000. A “forensic audit” is as a review of loan file documents in an attempt to discover mistakes made at loan closings with a “voluminous report” being generated at the conclusion.
If you are not experiencing financial problems, then researching and locating a local legal professional may be more prudent. This may be a less expensive and more intelligent alternative if you honestly suspect there was a mistake made on your loan documents and you feel inclined to investigate.
If you are behind on your mortgage payments and cannot afford basic living expenses, you can clearly see the potential for harm to your situation if you fall prey to people asking for money and promising help.
People who are overwhelmed with debt and the possibility of losing their home are clearly vulnerable during this time and are susceptible to making poor financial decisions.
If you have access to cash and your residence is in foreclosure those funds should be used to make payments on a trial modification program and stop the foreclosure. If you do not qualify for a loan modification, then those funds could be used to find and relocate to more affordable housing.
If you are delinquent on your loan payments and need immediate assistance you may call 1-888-995-HOPE (4673). The Homeownership Preservation Foundation (HOPE) is a non-profit HUD approved counseling agency in direct partnership with President Obama’s Making Home Affordable initiative. Their services are entirely free of charge.