Beware of Mortgage Relief Scams

People can get understandably desperate when they’re in fear of losing their homes. This makes them ripe targets for scam artists. Is it any wonder, then, that there are so many ads from companies promising to help homeowners these days?

Since the financial crisis, companies offering mortgage relief have become more common than ever. However, many of them are not on the up-and-up.

According to Susan Stocks of the Consumer Financial Protection Bureau, there are some clear warning signs that homeowners should look for whenever someone is offering them relief from a legal foreclosure process:

“1. Demands for payment upfront. If a lawyer or someone claiming to offer legal help wants to be paid first—before you receive a modification—they may be breaking the law. A licensed lawyer can ask you to pay first but only if the lawyer is licensed in the state where you live or where your house is located. Even a licensed lawyer in your state can only receive up-front payments if they meet other requirements about what they charge for, how they deposit the money, and if they comply with all other state laws and regulations.

  1. Any claim that a modification is guaranteed.Your mortgage company must agree before you can get a modification. A lawyer or someone claiming to offer legal help cannot guarantee you will get a loan modification.
  2. A hard sell. Most licensed lawyers do not call or e-mail you directly and push you hard to pay money right away. If someone claiming to be a lawyer calls you on the phone and asks you to sign papers or pay them right away, ask some more questions to be sure it’s not a scam. Here’s a guide to help you determine if it’s real legal help or a foreclosure scam.”

Stocks also warns homeowners to carefully check out anyone before you let them act on your behalf. She points out that mortgage companies will often require homeowners to appoint a third party to act on their behalf when seeking mortgage relief. Just be sure that whomever you appoint is trustworthy, since many of the people offering these services clearly aren’t.

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