Spotting a Mortgage Modification Scam
In the wake of the pandemic, millions of homeowners are struggling to keep up with their mortgages. Unfortunately, there are far too many con artists out there who are more than willing to take advantage of people while they’re vulnerable. One common con that’s currently on the rise is known as a mortgage modification scam.
In this post from Bill Buys Houses in Minnesota, we’re breaking down everything you need to know to spot a mortgage modification scam. To get in touch with a trustworthy cash home buyer if you’re in the process of foreclosure, give us a call today.
What is a Mortgage Modification Scam?
These days, it can be tough to tell legitimate businesses and organizations from scams. We’ve all received a call, text, or email at some point that looked and sounded like the real deal but turned out to be a phishing operation or a scam. And one of the most common and unfortunately believable cons is the mortgage modification scam.
To pull off the mortgage modification scam, a self-professed “mortgage consultant” or “foreclosure consultant” will use public information purchased online. After identifying potentially vulnerable homeowners who are at risk of foreclosure, these con artists will contact the unsuspecting targets by email or phone.
These scammers prey on homeowners’ vulnerabilities while they’re under duress, offering them relief through a nonexistent program that’s meant to prevent foreclosure. And just like that, unsuspecting marks become victims of fraud, adding to their already existing troubles.
These are the most common types of foreclosure prevention scams:
1. Nonexistent Government Programs
Anyone can easily create an official-looking website that looks convincingly like the real deal. Fake programs will typically use active government keywords or organizations in the title with language like “Federal” or “Department of Housing.”
Scam artists will even purchase URLs that are nearly identical to official government websites. If you look closely at the website, you may notice that something just isn’t quite right, but most of us are far too trusting to scrutinize something that appears legitimate on the surface. And once they’ve convinced you to give over your information, you’re likely to be targeted for identity theft.
2. Secret Law Scams
Anytime a caller or email message touts a “little-known” law allowing homeowners to eliminate their debt, consider it a red flag. These con artists will make promises based on legal loopholes that simply don’t exist while offering vulnerable homeowners the opportunity to eliminate their debt without paying back their mortgage.
3. Rent-to-Own and Leaseback Cons
When you’re at risk of losing your home, the promise of an opportunity to get out from under the debt while leasing to own your home can sound too good to be true. But unfortunately, it most likely is.
This scam works by convincing homeowners to transfer their home’s title over and then rent their home from the new owner. At the same time, they’ll offer terms that are nearly impossible to comply with so they can easily back out of the deal at the first chance they get.
4. Fraudulent Loan Modification Plans
For this scam, con artists will pretend to be foreclosure counselors acting as an intermediary between a lender and the homeowner. They’ll claim they are going to negotiate a loan modification or repayment plan. All you have to do is send your mortgage payments directly to them. By the time you realize you’ve been getting conned, you may have paid out thousands to a stranger you’ll never be able to recover your money from.
Homeowners who fall victim to mortgage scams aren’t just gullible dupes. By the time these types of con artists contact their marks, the homeowners are typically looking for any miracle to help them avoid bankruptcy. That’s because bankruptcy should only be used as a last resort when there are no other options on the table.
While filing for bankruptcy can feel like an instant fix for debt, it won’t save you from foreclosure. Worse, it can damage your credit report for up to a decade, making it difficult to get another loan if you need one in the meantime.
Avoiding a Mortgage Scam
Keep an eye out for these signs that you may be a potential target for a mortgage scam:
● Work with a legitimate financial or housing counselor through HUD.
● Talk to your lender about alternatives to foreclosure.
● Never pay money to anyone who isn’t with your mortgage company.
● Read everything thoroughly before signing.
● Report suspicious activity.
Avoiding Foreclosure With a Cash Home Buyer
If you’ve done everything you can to avoid foreclosure, consider selling your home to a cash home buyer to avoid a serious mark on your credit that can last for years. At Bill Buys Houses, we can help you sell your house fast so you can get out from under that loan and move on without worrying about scammers and foreclosure. To find out more about selling a house in as is condition, connect with us online or call us today at 651-270-9191.