Mortgage Scams Are Out There: Borrowers Beware!!!
A recent client who came to Lakeside for foreclosure prevention counseling had been contacted by dozens of firms offering him help to "save his home" and "fix his mortgage." The solicitations arrived within days of the notice that his lender had filed for foreclosure. Coincidence? Not hardly.
An entire industry exists, whose members market almost exclusively to people with financial hardships. They offer credit repair, bankruptcy, legal help, and mortgage modification assistance, often for a fee and usually with highly optimistic and often unrealistic commitments. In some cases, the offers may be well-disguised loan scams. Sorting out what is a trustworthy and reliable offer from the scams is a challenge and many struggling homeowners find out the difference the hard way.
Lakeside is part of a national Loan Modification and Mortgage Scam Awareness campaign designed to raise awareness of these scammers. Through the campaign, we are providing individual and group education, distributing information throughout the community, and helping homeowners make complaints and recover their money, where possible.
Though the scams come in many shapes and sizes, here are some things to look for:
• Someone requests a large up-front fee before any service has been provided.
• Someone promises you an outcome – no one can see the future and anyone who says they can is not to be trusted.
• You are asked to sign documents transferring title to your property or allegedly allowing someone else to pay the mortgage, provided you make payments to them.
Struggling borrowers are also often solicited by attorneys offering to help them file bankruptcy. A personal bankruptcy does not prevent foreclosure, though it can delay it. There are other potential advantages to bankruptcy, though it is not for everyone. You should always consult with a trusted attorney or public legal service before undertaking something like bankruptcy or if you have questions about legal matters. Illinois Legal Aid online, a nonprofit resource, is a great place for information, videos, and referrals on legal topics like bankruptcy. A quick search on their website provides a variety of articles, short videos, and information on how to locate free or sliding-scale attorneys.
According to the Prevent Scam Network, "foreclosure consultants and attorneys are teaming up to defraud homeowners experiencing mortgage-related distress. This is because individuals acting as "foreclosure consultants" are not entitled to receive payment until their loan modification work is completed. However, attorneys are permitted to accept advance fees for providing typical legal services. As a consequence, some foreclosure consultants and others offering foreclosure prevention services may partner with attorneys in an effort to get around laws that prohibit them from receiving payments from homeowners before providing the foreclosure prevention services. Homeowners should know that these partnering arrangements may violate the ethics rules governing attorneys' professional conduct in Illinois." For more on this, see this page on Illinois scam prevention resources.
You should also take advantage of the knowledge of your local HUD housing counseling agency. Many of the services offered by fee-based services are provided at low-cost or no-cost by agencies like Lakeside. And unlike the fee-based services, we have no financial investment in your decision.
Remember what you learned as a child – it is seems too good to be true, it probably is.