Loan Modification Scams on the Rise: How We're Helping Raise Awareness

November 29th, 2010
Genelle Sims meets with counselor Eric Jennings at the free foreclosure fair

Out of desperation, Cassandra Pippin took a chance on an offer that she knew seemed too good to be true.

“I wanted to keep my home so badly,” she says.

A financial company in Livonia contacted Cassandra this past spring. The company had learned that she had missed three mortgage payments and was at risk of foreclosure.

Cassandra, 35, purchased the home in Lincoln Park in late 2007 with her grandmother. A year later, her grandmother died suddenly, and Cassandra was left to pay the mortgage by herself. Cassandra then suffered a loss in her income when her hours at work were cut by more than half. She exhausted her savings to make ends meet, and then fell behind on her home loan.

The financial company promised her that they would get her lender to do three things: forgive her late fees, restructure her loan at a low fixed rate, and even pay part of her principle. They asked her for $2000 and advised her to stop paying her mortgage and let them mediate all contact with the lender.

Cassandra gave the financial company the $2000 she had saved to make two mortgage payments. In the coming months, the company stopped returning her calls. By the time Cassandra had come to Southwest Solutions for foreclosure help, she had fallen behind on her mortgage by nine months.

“If I lose my home, I’m afraid that I will never be able to own another one because no one will want to offer me credit,” Cassandra says. “My dream of being a homeowner will be gone, and that will be devastating for me.”

Cassandra has notified the Michigan Attorney General’s officeabout the financial company. The office has already filed criminal complaints against eight Michigan-based companies for defrauding consumers through foreclosure rescue scams. In addition, the AG has identified more then 65 out-of-state companies that may be involved in scamming Michigan homeowners facing foreclosure.

Nationwide, the problem of loan modification scams is escalating as the foreclosure crisis continues. Scammers use publically available information about foreclosure notices to contact homeowners. Unsuspecting homeowners, lured by the false promises, then lose thousands of dollars and often their homes. Many of these homeowners could have kept their homes if they had received legitimate foreclosure intervention counseling from a HUD certified agency.

To combat this problem, NeighborWorks America has launched a national public education campaign to help homeowners protect themselves against these scams, find trusted foreclosure counseling and report fraudulent schemes to authorities.

The campaign is called Loan Modification Scam Alert, and NeighborWorks is working with its community-based affiliates across the country to get the word out. The Housing Opportunity Center (HOC) at Southwest Solutions is participating in the campaign to reach at-risk homeowners in the Detroit area.

“Loan modification scams prey upon the anxiety of homeowners who are desperate to save their homes, but who lack good information about working with the lender and a trustworthy counselor,” says Hector Hernandez, who directs the HOC. “Our hope is that this campaign will help homeowners detect and avoid these scams.”

Homeowners at risk of foreclosure should stay clear of any company that:

  • Asks for a fee in advance
  • Guarantees that they’ll stop a foreclosure or modify a loan
  • Tells the homeowner to stop paying the mortgage lender and to pay them instead

The HOC is a leading provider of foreclosure intervention counseling. It is a HUD-approved agency that works with homeowners throughout the metro area and across the nation. To learn more about its services, call 313-841-9641.

For more information about the Loan Modification Scam Alert, call 888-995-4673 or visit its website .

Comments are closed.

Copyright © 2021 Southwest Solutions

Web Design & Development by Douglas Marketing Group