How to avoid Foreclosure Scams
Transfer Ownership
NEVER transfer ownership of your home to a company to save it from foreclosure. Selling your house to a private company with the plan of buying it back in the future rarely works. The company often ends up the owner of the home for far below market value.
Pay for information
A mortgage modification requires information. A company that wants payment before they will take any information from you is a bad sign. A good company is going to find out at least the three major requirements for an approvable modification. All companies require payment to provide a service to you but they first must be sure you qualify. If you can't qualify then they should never accept payment. Companies that are achieving modifications can find out if a homeowner qualifies very easily.
Know the right questions
A homeowner should learn what it takes to qualify. Knowing the qualifications will assist in figuring out if the company you are talking to is a legitimate company. If they are not asking you about your loan, personal expenses, and income they can not qualify you. If you have given very little information and the company has begun talking about payments and how to give them money it may be a scam. You should feel that the company has a complete picture of your financial situation before they give you a recommendation or ask for a payment. You should feel that the person you are speaking with is really getting to know your individual problem.
Better Business Bureau
A homeowner should do some research on the company they are considering. We recommend the Better Business Bureau. Check for complaints against the company. Check the resolutions to the complaints. No company is perfect, they all have had BBB complaint's. You should be interested in how the resolved those complaints.
Examples of modifications
Ask for modification examples. Companies can show you the actual bank approved modifications if they black out personal information. Banks will fax a final approval sheet explaining the final conditions of the approval.
Where is the work done
Find out who is doing the actual negotiations with the bank. Companies will often outsource the actual modification work to a group of profesional negotiators. Companies should have or use professional mortgage negotiators, have lawyers to insure legal compliance, and have processors to handle the paperwork.
Credit history not a problem
Modifications are not the same as refinancing. Equity in a home, credit scores, appraisal values, closing costs, title work do NOT affect a modification. Keep in mind you are not asking the bank for more money you already have their money. You are restructuring the repayment schedule. They will need a report to document your expenses.
Do it yourself
Be cautious if attempting a modification on your own. Be sure to learn how it works first. Banks have limitations on modifications and how often they can be done. Banks often limit modifications to once in the life of the loan, or once in a defined number of years.
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