Consumer Alert: Protect Yourself From Loan Scams
By Space Coast Daily // January 15, 2015
Victims often pay a large fee for the loan
TALLAHASSEE, FLORIDA – Have you experienced trouble with a mortgage, undergone reduction in income or even been faced with foreclosure?
Many people confronted with these troubling situations turn to loan modifications.
While loan modifications are a legitimate business and can be beneficial to struggling homeowners, mortgage modification and home foreclosure rescue companies can be deceptive and fraudulent in practice.
Following the start of the subprime mortgage crisis in 2008, fraudulent mortgage professionals began setting up “foreclosure rescue” companies, promising to modify desperate homeowners’ mortgages for a large fee used to persuade lenders.
At times, the scammer can complicate the problem by asking their clients to stop making their mortgage payments or to transfer the payments to them while the fraudulent business “negotiates” with your mortgage loan servicer.
In the end, targeted victims often pay a large fee for the loan modification service; the fraudster takes their money and does nothing to secure the results that were promised.
Severe cases of loan modification scams can result in the repossession of the property and significant credit damage.
The Florida Office of Financial Regulation (OFR) advises caution when using services offering to help negotiate with lenders to modify the terms of your loan.
Below are red flags that might indicate a scam:
•Requirement of a large upfront fee for financial relief services
•Pressure to sign a contract before services can be provided
•Pressure to sign over the title to your property
•Asking you to stop or redirect mortgage payments
•Requiring additional fees to continue efforts on behalf of your case
Loan modification scams take advantage of troubled and vulnerable consumers who are delinquent or facing foreclosure. Scammers may advertise loan modification services on the radio, television and via e-mail.
The OFR urges consumers to research and consider the risks associated with loan modifications before conducting business with any professional.
Florida law requires businesses and individuals performing loan modifications on behalf of consumers to be licensed with the OFR.
When considering whether or not to do business with a loan modification professional, please verify their license at flofr.com
If you feel that you may be a victim of fraud or to report suspicious activity, please file a complaint with the OFR online, flofr.com, or call 850-487-9687.