Spotting a Loan Modification Scam

If a mortgager can apply for a loan modification by himself, why would he enlist an attorney to do it for him? There are several reasons for which obtaining legal representation is advisable (such as protecting oneself from foreclosure while the application is under review). However, the prevalence of loan modification scams has made the decision to hire an attorney closer to a necessity than a luxury. A loan modification lawyer in West Palm Beach can protect clients from scams, but being knowledgeable about tactics commonly used to deceive mortgagers remains important nonetheless.

Here are some ways to spot a scam.

The Company Guarantees the Modification

If a company tells a borrowers that the company will guarantee he will receive a modification and thus be free from the threat of foreclosure, he has been sorely misinformed. While exceptional representation can go a long way, it does not guarantee that the application will be approved. The company or attorney a person works with should be upfront and honest, with the debtors’ best interest in mind. Any company that guarantees a result is a scam.

There’s Pressure to Sign on the Dotted Line

If a borrower is asked to sign over the deed to his home or sign documents without carefully reviewing them first, a red flag should be raised immediately. No authentic counselor would advise a mortgager to sign a document he hasn’t read. Likewise, signing over a deed is a futile effort to try to release oneself from debt, as the homeowner will still be required to make mortgage payments after having done so.

Fees Are Required Up Front

For this type of service, requiring a fee upfront would be against the law for companies and individual consultants. Only attorneys may charge fees upfront, and even then those funds must be placed in a trust account. That said, it is important to ensure the person is in fact a licensed attorney.

A Debtor is Told to Stop Paying the Mortgage

Many hold the belief that stopping mortgage payments is an effective way to increase the odds of getting a modification approved. While it may have the desired effect, it is definitely not advisable. This action can lead the borrower right into foreclosure. Additionally, it is never a good idea to submit payments to anyone who isn’t the mortgage lender — even if it is your modification counselor.

Protecting oneself from loan modification scams requires knowledge and strong legal representation. Mortgagers should only work with someone they know and trust when seeking out a modification, and are advised to never give out personal information online or over the phone. With the right legal guidance, these scams can be avoided, and the odds for getting approved for a modification will increase.

If you are struggling to keep up with mortgage payments, your first step should be to call a loan modification lawyer in West Palm Beach. At Kelley Kaplan & Eller, our team is skilled in loan modification and can work with you to ensure your best chance of receiving optimal repayment terms. Call our office today to learn more.