Loan Modifications

Last night I met with a friend of mine's just to chat and catch-up.  I hadn't seen or talked with him for a few weeks.  I asked him about the status of his loan modification, which he desparately needs as a result of his impending divorce.  My dear friend told me that he had hired a third-party to negotiate on his behalf with Bank of America to reduce his mortgage payments and get rid of the outrageous balloon payment that is coming due in a couple of months.  I was absolutely mortified at what he told me, including the fact that he has paid this third-party, in full, fees to the tune of approximately $3,000.00.  I told him to call his servicer first thing in the morning and inquire about the status of his loan modification.  I have a gut feeling that he's been scammed.  Below are some tips for you to avoid being scammed as suggested by California's Attorney General's Office:

5 Tips to Avoid Being Scammed

1. Don't pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
2. Don't ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
3. Don't transfer title or sell your house to a "foreclosure rescuer." Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
4. Don't pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
5. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

If you reside in California, you can go to the Attorney General's website and check to see if the third-party you are working with is registered with the Attorney General's office.  You can also obtain a list of consultants who are.  Just click on this link California Attorney General.  I also highly recommend NACA (Neighborhood Assistance Corporation of America).  They have a very good track record working with servicers and advocating for a mortgage solution that is in the best interest of the homeowner NACA.

Be smart, be diligent and be persistent.  Help is available.  Have a great day!