Loan Modification Scams
Over the past year or so there has been a huge increase in the number of businesses offering loan modification services, a field that previously was not known by many. So because of this a large increase of complaints to the Federal Trade Commission (FTC), Attorney General (AG) and the Department of Real Estate (DRE) have also taken place. Resulting in many of these scam companies being sued and subsequently shut down.
Homeowners who are behind on their payments will often get contacted by a company who claims they offer special loan modification services. Beware of this, if your home is in the foreclosure stage it is posted in public records (like the newspaper) and that is probably how these companies found you.
Many of those companies offering loan modification services claim to have “inside knowledge” of the mortgage industry and promise that they will “cut through the red tape” to convince your mortgage servicer to change the terms of a loan. More than likely these are just brokers who will try to collect an upfront fee and run with your money.
What most consumers don’t know is that section 2945 of the California Civil Code requires “foreclosure consultants”, that is, people who do loan modifications, to be A. Attorneys or B. registered with the Department of Real Estate before an advance fees can be accepted. Section 2945 also states that even if registered, a loan modification company cannot accept advance fees after a Notice of Default has been served.
Even the Federal Trade Commission is cracking down on fraud and deception by mortgage modification and home foreclosure rescue companies. The FTC is seeking to halt the proliferation of these mortgage relief scams – which target distressed and vulnerable consumers who are delinquent or facing foreclosure – through increased law enforcement, consumer outreach, and close coordination with federal, state, and non-profit partners.
