Loan Modification Scams Abound in the Wake of the President’s New Plan

Plummeting house prices and the pitiful state of the economy might have done the unthinkable: you can no longer afford the monthly payments on your home. Maybe you’ve experienced a personal financial crisis at the worst possible time. Whatever the reason, you’re in trouble. You need a loan modification. You naturally want to get out of this desperate situation as soon as possible, but don’t make a rash decision and forget to be careful of loan modification scams. You will be sorry in the long run if you fall prey to a scam.

Loan modification by itself is a great option. It’s completely legitimate and legal. Lenders can word with borrowers to modify their loans and bring monthly payments down to a sustainable level for you. President Obama recently signed the Making Home Affordable plan, which creates a $75 billion initiative to perform loan modifications for up to 5 million troubled homeowners.

First, participants are referred to a financial counselor. They can discuss your situation and get the home loan modification ball rolling. A financial counselor represents and advocates for a homeowner, helping them to get an affordable loan modification. It’s recommended to use a free financial counseling service from a non-profit group with HUD approval.

Some loan modification assistance companies are for-profit organizations that charge for service. This has become a huge business with the downward spiral of the housing market lately. Some of these companies are reputable and others are not. You just have to exercise a lot of caution when working with a for-profit loan modification business.

The following items signal a reputable loan modification company:

1) A positive standing with the Better Business Bureau (BBB, the Federal Trace Commission (FTC), and the Consumer Protection Agency (CPA). Also, no negative information comes up when doing a Google search on the company name.

2) Offer of a full money-back guarantee if a loan modification or alternative isn’t reached.

3) Willingness to give a detailed explanation of all actions and charges.

4) Located in a physical location; has an actual office that you can visit.

Doing a little homework and being careful means that you should be fine when looking for a loan modification assistance firm that can get you back on track financially. There are plenty of legitimate for-profit companies out there, but others are fraudulent. Don’t trust anyone who requires big up-front charges, doesn’t guarantee a refund in case of no solution, or just seems a little off.

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