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YOUR Home and Car

Beware of Mortgage Modification Scams

Scammers try to take advantage of homeowners behind on their mortgages.

Homeowners should be wary of scams that charge an upfront fee in order to start a mortgage modification program. Such modifications can almost always be done by the mortgage holder themselves or through approved non-profit mortgage counselors for little or no cost. Homeowners often end up paying for work that is completed by the company asking for the money, and, in the worst cases, the homeowners pay for work that isn't completed at all.

The scams are usually initiated over the phone, through mail, or by door-to-door salespersons. Many distressed homeowners dealing with foreclosure or mortgage delinquency have been receiving telemarketer-like phone calls from companies that offer to assist with mortgage modification. The modification programs typically charge between $500 and $1,000, followed by larger charges depending upon the size of the eventual loan modification. Homeowners should avoid paying any upfront fees. 

Many of these operations have official sounding names intended to make homeowners think they are working with of the Obama Administration's "Making Home Affordable" program. Some scams even send documents designed to look like it is from the homeowner's lender. The government and mortgage companies are almost never affiliated with such for-profit loan modification consultants.

These modification scams are essentially charging homeowners thousands of dollars for a paperwork service. These companies may not conduct any negotiations on the homeowner's behalf and do not guarantee any results. They merely ask you to compile the documents that the mortgage company requires for modifications and send them off to the company. 

Many mortgage modification companies will advertise that they are affiliated with an attorney or that they are an attorney’s office representing consumers with modifications. Some of these companies are affiliated with attorneys, some are not. However, it is important to confirm that the attorney you are working with is licensed to practice in Kansas.

Homeowners seeking to avoid foreclosures should work with counselors approved by the Department of Housing and Urban Development, which lists these non-profit organizations by state at http://www.hud.gov/.

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