Loan Modification Scams Still a Worry for Homeowners

Ever since the housing crisis began almost a couple of years ago, homeowners have been looking for genuine solutions to avoid losing their homes. Getting a home loan modification has been one of the best options in order to lower your monthly payment and avoid foreclosure. Because of this, hundreds of thousands of families have been trying to get a loan modification for a long time. However, the number of foreclosures in the country has only been going up and unfortunately there are still millions of families who face the risk of losing their homes to foreclosure.

This situation is mainly because a number of companies have resorted to blatant cheating and scamming homeowners out of their hard earned money. Since loan modification is one of the few really solid options available, homeowners have been rushing to any advertised loan modification company or attorney making unbelievable promises and have been agreeing to exorbitant fees just to apply for a loan modification.

Sadly, these companies who charged the homeowners upfront fees which sometimes are as high as $7000 simply shut shop and run away never to be heard from again. Once the homeowner ends up paying anything upfront, they seldom hear from the loan modification company after that. At the most the company might be in touch for a week or so saying your application is being processed but in reality no application was made in the first place. Since the modification process takes about 90 days or more to work with lenders, most companies get discouraged trying to get something done so they give up. These companies give up because there is no longer a financial incentive to get a modification for their clients since they have already been paid their fee at the outset.

Taking advantage of the unfortunate situation the homeowners find themselves in, various companies or so called consultants, make false promises on being able to save the homes from foreclosure and often end up cheating their customers out of a lot of money. Instead of the number of scams decreasing, it is not only going up but newer scams have been reported by various homeowners who have been victimized by these scammers.

Many times a company will tell you that they would not charge you until your loan modification is approved. What they don't mention is that the loan modification application is simply approved by their own staff and not the actual bank or mortgage lender. After a week or so of applying, these companies would get back to the homeowners saying the loan modification application was processed and approved by a team of qualified experts. Then they proceed to say the homeowner now needed to pay a fee upwards of $3000 to get the loan modification sanctioned from the bank.

In reality, until and unless your mortgage lender themselves approve the loan modification, no matter how many experts claim your application has been sanctioned, it does not mean your loan will be modified.

It is advisable that a homeowner should contact only those companies who specifically mention that there won't be any upfront fees until your loan modification is approved by your lender. The keyword here is lender and anything else might be just a way to pull you in before charging a huge amount.

Although homeowners have to be careful of so many scams, they should not feel scared of a loan modification as it still remains one of the best solutions for avoiding foreclosure. All you have to do is make sure you find a company that does not charge any upfront fees until your mortgage loan modification is fully approved by your bank or lender.