Loan Modification Fraud - Why should You be Worried?

There are some so-called specialists who claim they can secure a loan modification for any homeowner in any circumstance. They charge an unreasonable fee that takes advantage of desperate homeowners.

Many homeowners are seeking ways to have their loans modified so they can avoid having their homes foreclosed, so it is not surprising that many are falling victim to scam artists posing as loan modification specialists. Lenders are still hesitant about accepting loan modifications and homeowners are looking for legal advice to get their applications accepted. Fraudulent loan modification companies are often turned to in times of need.

There are eligibility requirements that lenders have for homeowners applying for a loan modification. Most of these are very vague. When a homeowner is rejected, he does not know if it was simply the luck of the draw or something he did wrong. Fraudulent loan modification companies seek out customers who have unsuccessfully applied for the modification program for whatever reason. They will claim that if the homeowner applies again, they will guarantee they will be approved. The homeowner is led to believe that all they need for success is a qualified specialist team. This is the truth in some situations, but there are no specialists who can help an unqualified homeowner get approved for a loan modification.

Usually these companies or the specialist will ask for payment at the beginning of the process, justifying the expenses as needed for the negotiation stage, to gather the paperwork or even just as a deposit. The amounts they have charged homeowners vary from $150 on the low end to $5,000 on the high end. Some scammers even add another fee later, for 'additional negotiation' or charge fabricated fees that they say the lender is charging. In every case these fees are entirely made up and they are only serving to line the pockets of the fraudster with money desperate homeowners cannot afford to lose.

If the customer cannot pay the 'fees', some of these fraudulent companies will offer then reassurance that they do not need to pay their mortgage payments during this time of negotiations. They tell them that if they pay their mortgage they are showing the bank that they are not in such desperate circumstances and will actually delay the process. This is totally untrue.

Some lenders view missed payments as a sign that the homeowner is not willing to try or is in very difficult circumstances and will not be able to pay the modified loan. The bank then proceeds with foreclosure and the homeowner is taken completely by surprise when they get this notice. For some homeowners, this is the last straw and they simply cannot cope. For others, having spent all their money on false hope, they have no way to fight off foreclosure.

While the FBI is trying to identify the fraudulent companies that exist amid many legitimate organizations, the onus is on the homeowner to be careful, investigate fully and know the facts.

For essential tips and facts about how to get approved for a Loan Modification, Visit our simple, no nonsense loan modification guide and resource: Mortgage Modification Loan.