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Beware of Mortgage Loan Modification Scams - Get Free Help
   

A recent development in the ongoing mortgage and foreclosure crisis is the emergence of a new type of business which purports to offer “loss mitigation consulting,” “foreclosure prevention,” “mortgage loan modification,” and similar services. The Division of Banking has seen an increasing number of advertisements, direct-mail solicitations and other marketing materials offering consumers assistance in negotiating resolutions of their delinquent residential mortgage loans with lenders and servicers, frequently in exchange for up-front fees.

The Division has also seen solicitations to licensees and to attorneys to partner with companies that purport to offer such services. These marketing materials suggest that these businesses will help delinquent borrowers obtain payment plans, loan modifications, short sales and deeds in lieu of foreclosure. Mortgage bankers, brokers and solicitors have been targeted by these businesses in hopes of obtaining referrals.

The Division has received consumer complaints regarding fees paid to parties providing these services. The Division has also received inquiries from persons who are interested in entering such a business. As a result, the Division would like to supply the following information:

 
What is a loan modification?

A loan modification involves modifying the terms of an existing loan, typically to make it more immediately affordable for a borrower in imminent danger of default, for instance because of a scheduled rate increase. The terms commonly modified are the interest rate or the term of the loan. A loan modification is not a form of mortgage loan refinance.

BEWARE OF MORTGAGE LOAN MODIFICATION SCAMS -
  • There is never a fee to get assistance or information about the "Making Home Affordable Plan" from your lender or a HUD-approved housing counselor.
  • Beware of any person or organization that asks you to pay an upfront fee in exchange for mortgage counseling services or modifications of a delinquent loan. Do not pay - walk away!
  • Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company, or your attorney.
  • Never submit your mortgage payments to anyone other than your mortgage company without your mortgage company’s approval.
 
  Five Tips for Avoiding Foreclosure Scam
 
  1. Work Only with a nonprofit, HUD-approved counselor.
  2. If you are looking for help to prevent foreclosure, be sure the counseling agency you use is on the Department of Housing and Urban Development's (HUD) list of approved agencies.  For an easily searchable list of HUD-approved housing counseling agencies, call 877-HUD-1515 (877-483-1515) or click this link for the listing of HUD approved counselors in Illinois on the U.S. Department of Housing and Urban Development (HUD) website here.
    If you are approached by foreclosure counselors--by mail, phone, or in person--make sure the counseling agency is HUD-approved before you do business with them.

  3. Don't pay an exessive amount.
  4. You should not have to pay hundreds--or thousands--of dollars. Most HUD-approved housing counselors provide no-cost counseling services and many more provide low-cost counseling. Do not agree to work with a counselor who collects a fee before providing you with any services or who accepts payment only by cashier's check or wire transfer. In general, do not pay money to anyone unless you know exactly what services you will receive.

  5. Be wary of "guarantees."
  6. A reputable counselor will not guarantee to stop the foreclosure process, no matter what your circumstances. Working with a legitimate counselor can certainly increase your chances of keeping your home--but be wary of people who promise a sure thing. Again, get the details of your transaction, along with any promises, in writing first.

  7. Know what you are signing.
  8. Don't let a counselor pressure you to sign paperwork you haven't had a chance to read through carefully or that you don't understand. Don't sign any blank forms or let "the counselor" fill out forms for you. Be sure to talk with an attorney before signing anything that transfers the title of your home to another party.

  9. If it sounds too good to be true, it probably is.

    If you feel you may be the target or victim of foreclosure fraud, trust your instincts and seek help. For tips on spotting scam artists, visit the Federal Trade Commission's webpage  (www.ftc.gov) on foreclosure rescue scams. Report suspicious schemes to your state and local consumer protection agencies, which you can find on the Federal Citizen Information Center's Consumer Action Website. (www.pueblo.gsa.gov).

 

Help Is Free

 

Help is Free

Call your current mortgage servicer.
  Help is Free Call HUD 1-877-483-1515 or visit HUD online here.
  Help is Free HOPE NOW 1-888-995-HOPE
  Help is Free Call Interfaith Housing Center: 1-847-501-5760 (Chicago North and Northwest Suburban area)
  Help is Free Central Illinois Debt Management and Credit Education: 1-888-671-2227
  Help is Free St. Clair County - The Housing Conseling and Assistance Center 1-888-397-5730
  Help is Free NACA: Neighborhood Assistance Corporation of America 1-773-723-6222 or 1-314-645-8333: (Southern Illinois)
  Help is Free Illinois Department of Financial and Professional Regulation at 1-800-532-8785

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