If your mortgage payments have become to be more than you can handle financially, you consider doing a home loan modification. In a modification, the bank works with you to modify the terms of your existing loan, typically by extending how long you have to repay the loan or reducing your interest rate, which then reduces your monthly payment amount.
However, navigating the world of home loan modifications can be a complex task. It is a process fraught with numerous potential pitfalls, including the risk of falling victim to scams. It is such a prevalent scam that the Office of Inspector General reported that in 2022, approximately 1,000 people lost over $3.8 million to home loan modification scams in the United States. Thankfully, with a keen understanding of common scams, you can protect yourself and make the right decisions regarding your home loan.
Common home loan modification scams
Scammers often take advantage of homeowners in financial distress. They promise to negotiate with the lender to modify the loan or reduce the payments, often for a hefty upfront fee. However, they deliver nothing and leave homeowners in a worse financial situation.
Warning signs of scams
Several red flags indicate potential scams. If a company guarantees a loan modification or stops foreclosure regardless of your circumstances, beware. No one can make such guarantees. Beware also of companies that require an upfront fee or advise you to stop paying your mortgage and pay them instead.
How scammers make contact
Scammers use various methods to reach potential victims. They might send mail that looks official, make phone calls or even use online ads. If you receive unsolicited communication offering loan modification help, exercise extreme caution.
Check company credentials
Before engaging a company, check its credentials. Use resources available to verify a company’s legitimacy. These include the Maryland Department of Labor, Licensing and Regulation and the Better Business Bureau.
Protect yourself from scams
You can protect yourself by seeking legitimate help for your home loan modifications. Contact your lender directly and discuss your situation. Always research and verify any company or individual offering to assist with your loan modification.
Remember to always remain skeptical of offers that seem too good to be true and do your due diligence. The right decisions regarding your home loan can secure your financial future and keep you safe from scams.
