CANNOT refinance?
Appraisal values too low?
Late on your mortgage payments?
Mortgage payments keep adjusting higher?
There has been a staggering number of callers calling about Loan Modification Companies taking your money and pretty much failing to come thru to their promises.
I have always advised that you should first try to talk to your lenders yourself, before talking to anybody else. If that fails and someone promises to help you for a fee (specially if they tell you that they will promise loan balance reduction), tell them to show you proofs in writing. There is no reason why they would not do that.
Here are the most common scams that are defrauding a lot of homeowners:
The ‘Forensic Audit’
In exchange for an upfront fee, so-called forensic loan “auditors,” mortgage loan “auditors,” or foreclosure prevention “auditors” offer to have an attorney or other expert review your mortgage documents to determine if your lender complied with the law. The “auditors” say you can use their report to avoid foreclosure, speed the loan modification process, reduce what you owe, or even cancel your loan. In fact, there’s no evidence that forensic loan audits will help you get a loan modification or any other mortgage relief.
Rent-to-Buy schemes
Con artists who use the rent-to-buy scheme tell you to surrender the title to your house as part of a deal that allows you to stay there as a renter and buy it back later. They say that surrendering the title will let a borrower with a better credit rating get new financing and prevent the loss of the home. But the terms of these deals usually are so expensive that buying back your home becomes impossible. You lose the house and the scam artist walks off with the money you put into it. Worse, when the new borrower defaults on the loan, you’re the one who’s evicted.
In a variation, the scam artist raises the rent over time so you can’t afford it. After missing several rent payments, you’re evicted, leaving the “rescuer” free to sell the house.
In a similar equity-skimming scam, fraudsters offer to find a buyer for your home, but only if you sign over the deed and move out. They promise to pay you a portion of the profit when the home sells. Once you transfer the deed, they simply rent out the home and pocket the proceeds while your lender goes ahead with the foreclosure. The result: You lose your home – and you’re still responsible for the unpaid mortgage because transferring the deed does nothing to transfer what you owe on the mortgage.
Bait-and-Switch
In a bait-and-switch scam, con artists give you papers they claim you need to sign to get another loan to make your mortgage current. But buried in the stack is a document that surrenders the title to your house to the scammers in exchange for a “rescue” loan.
Know your rights
I have written numerous times that if someone was able to get a loan balance reduction to please call me and I will share this info to our readers. Why not help each other avoid scams and feel good about yourself. That is why we are here in America isn’t it. Not to take advantage of others.
This is a common occurrence now and the numbers are staggering as far as homeowners not being able to do all the above stated. I understand and sympathize with you and know what you are going thru. That is why I write these articles and try to give out as much information as possible, because by knowing what you need to do in a situation like this, it will give you some kind of direction as where to be headed or what to expect.
Based on what I have been reading and experiencing, here are my advices:
Don’t deny that you have a problem, read your mails and take the calls from the lender. Make sure you communicate and not hide from this situation. I will show you steps for you to know how to deal with these problems.
Do-it-yourself steps
You have to prepare a hardship letter to provide to your lender. If you loose hours from work, had a room mate or relative that was helping you pay your mortgage, Adjustable Rate Mortgage reset pushed your payments up by $500 or more, those are some samples of why some homeowners are in need of assistance from their lenders. Your lender will ask for proof of income ( 2 months of pay-stubs) they will ask for 2 months complete bank statements. They will need a list of all your expenses, revolving credit debts, utility expenses, insurance expenses, installment debts basically everything you need to pay for on a monthly basis. Get all of those information ready to provide to your lender and request for your interest rates to be reduce to 5-6% and payments to at least go down by $500.00 Request also for your loan balance to be decreased due to the declining market factor.
If that does not work or you don’t want to make time for it – call HUD (Housing Urban Development) Agencies that give out free counselors, these are Non-Profit Organization companies that are funded by HUD to provide counseling for FREE to homeowners in dyer needs of assistance. Here are some numbers :
LA County – 800-750-2227
Orange County – 714-547-2227
Or to find a counselor near you call 800-569-4287
Avoid Foreclosure prevention companies that charges money upfront – You don’t need to pay fees for foreclosure prevention help – use that money to pay for your debts instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a heft fee for information and services your lender or a HUD Approved Housing Counselor will provide for free.
I got a client call today who claimed that they heard of some homeowners being able to negotiate a lower loan balance with their lender, I have never heard of that and don’t think that is possible because everyone that we try to help we also request for a loan balance reduction from their lenders. We always get declined by the lenders for that particular request. So, if anyone has had a loan reduction approved by your lender, please share the information with me so I could inform everyone. Also another thing that is very common are borrowers suing their lenders to avoid foreclosure, please be very careful. I can name numerous callers paying tens of thousands of dollars to try to suit lenders but failed. One paid over $45K just in lawyer fees to later on get foreclosed too.
5. Don’t lose your house to foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be singing over the title to your property and becoming a renter in your own home! NEVER SIGN a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real professional or a HUD APPROVED COUNSELOR.
Remember, you can go to makinghomeaffordable.com to get detailed information on the entire process. Also, remember you will always want to seek advise from your CPA as far as possible income to be declared on a Recourse loan.
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Please continue to send in your inquiries, thanks again. Call Ken Go of 1st Innovative Finance Group at (562)697-7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Reminder: Don’t pay for a loan counselor, unless you have proof of what they can do for you. Don’t pay anyone to do a short sale!
There are other options besides foreclosure that you will be better off!
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