Archive for June, 2009

Mortgage Modification Scams

“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

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 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!!

ING DIRECT – Get $25 free bonus for opening a internet checking account

I been using ING Direct since 2006. It is one of the many internet banks but tops the list by providing great customer service and great rates. The saving rates beats many banks CD rates. With this current economy, the rates aren’t great it used to be few years ago. But they still offer 1.5% for both checking and savings.

They even have interest paid free checking account with no strings attached. You don’t have to maintain minimum balance to earn the interest. They have free online bill pay and check disburment service as well. It is called electric orange checking account.

I strongly recommend opening either a checking or savings account with ING Direct if you are considering to open a internet bank account. If you are interested, you get a referral bonus $25 by signing up with initial deposit of $250.

If you are interested with the bonus, please send me an email and I would be happy to send your referral link.

Happy banking!!

Every dollar matters – Cry baby Cry – Bargain Bank Accounts – Part II

Last week, I started a blog series title Cry baby Cry sharing few real life stories to save/get back the dollars I truly deserve by my money management.  In the previous blog post, I wrote how I was able to get credit card financial charges refunded back to my account. This blog post, I am going to share an interesting story on how I got stuck in string of cross product sales during my hunt to find a good business banking service.

Bank Account -A Search for Free Business Banking

Large bank chains have a habit of throwing a small fly at you to lure you in for a big catch. They entice customers advertising free offers with free cash bonus. To be charged later with big account service fees and maintenance charges. Once you step inside their door, customer reps will try to sell products with all attractive free add-on services, valid only for limited period.  In my case, the bank was Bank of America(BOA) and add-on service was Payroll processing service. Here comes the story.

I needed  payroll processing service for my consulting company. As a bargain hunter, I was looking for an affordable service. Charges from many payroll servicers in the market,  start with minimum $20/month for just simple service. I felt $20 was bit on the higher side to process just my paycheck. 

At that time, I was referred by a CPA to check on BOA’s free payroll processing service. Obviously, thats was a good deal. I can save $20/month which is $240/year. So I decided to stopby at nearby BOA branch to check it out. After talking to the Customer Rep, I found out there are lot of strings attached to this free offer. First, I needed to start a business checking account in order to use their payroll processing service. (1st catch) That I expected.  It didn’t stop there. 

Payroll processing is only free if the salaires of company employees  get deposited dierctly to their BOA checking account. If the employees don’t have BOA checking account, they needed to open new one. That is practically impossible for any small business asking their employee to open new checking accounts. (2nd catch).  Since I don’t have any employees, they needed me to open a personal checking for myself in order to get the business checking free. (3rd catch) They went still further. I also need to make my paychecks direct deposited to my personal checking account. (4th catch). It was too many strings but  I am getting what I wanted except few new accounts to maintain than I realized. I signed up without any second thought, hoping to save some money.

What happened next?

Six months passed, I found out that I don’t need to process my payroll. I was doing it wrongly to start with. So I immediately stopped using BOA payroll service. As I soon as I stopped processing payroll and direct deposits to my checking account, BOA started charging $5 as account maintenance fee to my personal checking account from the next month. I visited the branch and asked, how can I maintain my business and personal checking accounts without payroll service. They said, I needed some form of direct deposit to my personal account to both accounts free. Otherwise the fee will be charged as per terms.

I am self employed for my own LLC, I don’t get any other income to direct deposit. I asked for any other option but they couldn’t find anything to suit my need. They didn’t want to lose me as a customer as well, so they gave me 3 months of fee waiver until new offers arrives at later time. I also got the fees for 2 months refunded to my account. After 3 months, they started charging again.  I called and talked to the same rep one more time. She found a different offer this time. That 2nd offer, I need to use my check card to make atleast one purchase a month. I don’t purchase regularly for my business. I can’t avail that offer. So she gave me 3 more months of fee waiver. I was living in the grace of the rep with just fee waivers and don’t like to call every 3months. Next time fee waiver elapsed, I just went ahead and closed the accounts to avoid future trouble.

No Free lunch

My CFP Certification course has taught me clearly, there is no concept of free lunch. There is always cost associated in making even the so called free lunch. It is not actually free even if they offer it free. Similarly, there is always an opportunity cost associated with any free service. You either pay for the service as fee upfront or pay by giving them business. You are keeping your money in their bank which is similar to lending your money. They are using your money for their business. Either way, they are winning. You better find the common ground to make the best of the situation to get something you wanted which is well worth your time.

I like to conclude with few lessons to learn from my story:

1. Avoid opting for offers with too many strings attached.  It will work only if your situation stays constant. That is not always the case in our ever changing lives. Always try to open accounts or signup  for services without too many obligations or limitations.

2. Special deals are not always best for all situations. Try negotiating if your situation changes to get most out and reduce your cost. If it doesn’t work out, just get out as soon you can find a way out.

3. Finally, not all free offers are real deals. Avoid your impulse purchase or signup’s on accounts if you even get $100 bonus credit. It always comes with strings attached in fine prints, we often overlook.  

You time is also a very valuable commodity. Go for bargains if it worth your time and money without too many strings.

Happy and Careful Bargaining !!! More stories to come…

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