By Diana Palmieri
We’ve heard the term mortgage modification along with myriad assistance programs popping up a lot in the news lately. Generally, a mortgage modification is a process in which your current mortgage can be “modified” outside the original terms of your contract. This could result in a lower payment, a reduction in principal, or a change in the interest rate. A lender will want to modify a mortgage because the alternative can be foreclosure. This is something both you and the lender do not want.
Whenever there are programs to try and help us, sadly, you can always bet another evil genius will devise a scam to try and rip the rug out from under our feet. In the world of mortgage modifications, there are crooks out there who will try and get the better of you and could potentially scam you into signing away your home.
Here is what you need to watch out for:
- Asking for a fee in advance. Someone may pocket your money and do little or nothing to help you save your home from foreclosure.
- The “G” word. Someone is dropping the word “guarantee,” confidently telling you that you won’t be foreclosed and the modification is in the bag. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.
- Pay me instead–not your lender. Despite what a scammer will tell you, do not send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.
- Sign this right away or else! You don’t understand a particular document, and you are being told to sign it or foreclosure is inevitable. Seriously, a legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it. The counselor will also answer any questions or concerns you may have.
- The old “government-approved” or “official government” loan modification letters. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. Remember, you do not have to pay to benefit from government-backed loan modification programs.
- Someone else–instead of your lender–is asking for secure information. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.
If you are facing foreclosure and need help, there are many resources that can help you nationwide, which follow:
Federal Deposit Insurance Corporation
Federal Trade Commission
U.S. Department of Housing and Urban Development
U.S. Department of Justice
U.S. Department of the Treasury
National Coalition for Asian Pacific American Community Development
National Council of La Raza
National Fair Housing Alliance
National Foreclosure Mitigation Counseling Agencies
National Urban League
HOPE Now Alliance
Homeownership Preservation Foundation
National Association of Realtors®
Lawyer’s Committee for Civil Rights Under Law
American Bar Association
Furthermore, free of charge and if you qualify, you can have what’s called an independent foreclosure review. In April 2011, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision announced enforcement actions against 14 large residential mortgage servicers along with some third-party vendors for unsafe and unsound practices in servicing and foreclosure processing. Federal regulators then put into place this independent foreclosure review for the sake of borrowers who may have suffered financial negligence through errors, misrepresentations, or other deficiencies in foreclosure practices. I encourage you to visit www.occ.treas.gov and www.independentforclosurereview.com to see if you may qualify for this program. Please note they are looking to have all applications received by July 31, 2012.
Diana Palmieri is dually registered with Vanderbilt Securities LLC and H Beck Inc., which are unaffiliated. Securities offered through Vanderbilt Securities LLC, member SIPC/FINRA/MSRB.