Be Wary of the Lowest of the Low: Home Loan Modification Scammers
August 25th, 2010 categories: Chicago Real Estate News
There’s always one group of people that thrives when the economy is suffering: scam artists. And today, unfortunately, many of these scammers are targeting homeowners who are struggling to pay their mortgage bills each month.
Chicago Mayor Richard Daley recently warned city residents of so-called loan modification companies that are actually in business to rip people off rather than help them nab a more affordable monthly mortgage payment.
According to the mayor’s statement, there are plenty of legitimate, ethical companies out there to help homeowners modify their loans. Many of them are non-profit agencies that are working with the city. Unfortunately, there are many companies out there, too, who entered the loan-modification business as a way to make some quick bucks. These companies often have little to no experience with the mortgage-lending industry.
Daley warns Chicago homeowners not to work with any company that asks for an upfront fee. That’s the surest sign of a scam artist. You always want to work a loan-modification company that only accepts its payment after it has secured a lower mortgage payment for you.
Daley also says that homeowners shouldn’t work with loan-modification companies that promise or guarantee success. There’s a good reason for this: There are no guarantees when it comes to modifying a mortgage loan to a lower monthly amount. Mortgage lenders and banks aren’t required to modify any of their clients’ mortgage loans. A company that guarantees success is not telling you the truth.
Finally, Daley says that Chicago homeowners should never work with modification firms that advise them to stop making their mortgage payments. Homeowners who do this will seriously damage their credit scores. Missing home loan payments can also make it more difficult for homeowners to modify their mortgage loans.
The best way to seek a loan modification is actually to do it yourself. Call your mortgage lender if you are struggling to make your payments each month. Most lenders today are participating in the federal government’s Home Affordable Modification Program. It doesn’t cost a thing to call your mortgage lender. And if your lender approves your request for a modification, it won’t cost you a thing to move to a lower loan payment, either.
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