"Pay us $1,000, and we’ll save your home.”

"File for bankruptcy and keep your home. Call us”

"Loan Modification Lawyer, Call to keep your home."

I noticed many of these signs newly popping up along the roadside in recent days. I also saw forum questions increasing about same loan modifications scams. There are questions like "Can I use the Loan Modification Lawyer to get my loan modified?". I want to yell them saying "Noooooo, stop it. Don't do it". But they won't hear it. I decided to put a temporary brake on my previous Bargaining blog series to do some research to publish this blog post.

Scams are like virus to our community. Consider last month's Swine flu episode. When the flu was announced as pandemic by WHO (World health organization), it sent strong signal to all countries health organizations. They were put in the alert mode. One side, we heard many victims lost their lives to the deadliest virus. On the other, it created an opportunity for scientist to prove themselves at this crunch time. Many countries medical organizations started researching about the virus in an effort to find a vaccine.

Governments started working vigilantly informing and communicating to people via various media to create awareness about the flu. More awareness creates more carefulness by people which stops the spread of the virus. 

Similarly, scams follows the same trend. People lose their money to scams and produce a shocking news. These first time victims are unavoidable. But it eventually creates an alert situation to make others alarmed and cautious. Now people will be careful to approach anyone who provides same service in the future. Government and regulatory organizations are turned to work harder to stop these scams and put more stringent rules to avoid holes on future programs.

Why Loan Modification Scam?

Scams are bad but I hate when they take advantage of already worn out homeowners who are scrambling for any outlet. As per Scammers, they are just looking for new things to tap in their culprit mindset to earn quick cash. It doesn't matter whether economy is bad or people are going thru hardship.

Mr.Obama announced this program in Feb 2009 to help out distress home owners. It seemed really viable solution but there were hurdles in implementing this program. It took time and great deal of paper work for the lenders and mortgage companies. Meanwhile, Scammers took the time into their advantage and started advertising to work as intermediataries to help the homeowners.

Truth of the matter, you don't need an intermediatary for loan modification program. Your lender/mortgagor servicer should be able to help you out directly because they not only going to earn great deal from the transaction. They are also paid incentives from the government for doing every loan modification. They might take more time because of too many mods but they should be able to work with you if your situation really calls for it.

Do we have help?

Government cracked down on fraud and deception by mortgage modification and home foreclosure rescue companies. 

On 4/6/2009, FTC announced five law enforcement actions targeting perpetrators of mortgage-related scams. According to the FTC, these schemes typically operate in the following way. First, they use terms like “guarantee” and “97% success rate” to mislead consumers about the mortgage modification or foreclosure relief services they can provide; they charge up-front fees for these “services” – fees legitimate nonprofit organizations do not charge; and they use copycat names or look-alike Web sites to appear to be a nonprofit or government entity. Often, after collecting the fee, these companies do little or nothing to help consumers. Please read more details at http://www.ftc.gov/opa/2009/04/hud.shtm

Consumer advisory group also started campaigns spreading more awareness  on the Obama Home Modification program and how to be cautious on scams. This advisory provides tips on how to identify scams and what you should do. Check it out.

What can you do?

1. Approach your lender or mortgagor directly for any loan modification programs. They get incentives from government to do your loan modifications. They should be very happy to help you out.

2. Paying any upfront fees or sign papers with any third party agents is a big NO NO.

3. Do proper research over the internet and check on Better business bureau or legal organization for their legitimacy before using any service.

Visit the government website http://www.makinghomeaffordable.gov/ to get more information on Home Affordability and Stability Programs.

Scams/Scammers needs to be quarantined when identified and needs to create awareness among people to save them before they become a victim.

Please help spread the word around!!