Avoid Becoming a Victim of Loan Modification Scams

When mortgage debt becomes overwhelming, seeking a loan modification may be an excellent option for you and your family. Under certain circumstances, a well-thought-out and carefully constructed loan modification can help homeowners avoid foreclosure. However, as loan modifications become increasingly popular, scammers have opted to try and take advantage of vulnerable homeowners with increasing frequency.

Perhaps even more disturbing is the fact that many loan modification scammers are posing as attorneys. Some certified lawyers are lending their support to fraudulent so-called modification specialists, but others are simply holding themselves out to be licensed attorneys when they are not.

Ordinarily, a good way to avoid scammers is to reject any offers of assistance that demand a substantial amount of money upfront. However, attorneys are often required by state and federal law to charge large upfront fees for their services. This means that the ordinary rules of avoiding modification scams do not necessarily apply to those posing as attorneys.

On the other hand, consulting an experienced attorney is critical during the loan modification process in order to ensure that your rights are protected. So what is a struggling homeowner to do?

First, do your research. Use the Internet to ensure that the attorney you hope to work with is licensed. In addition, ask around. Chances are that if an individual has taken advantage of others, they will gripe about their unjust treatment on the web.

Second, generally avoid practices that only handle loan modifications. Rather, seek out the counsel of an individual who practices bankruptcy or some other practice area in addition to loan modification work. Many scammers focus on that issue and that issue alone.

Source: New York Times, “Avoiding Loan-Modification Hoaxes,” Lisa Prevost, Jan. 10, 2013