Loan Modification a Great Idea, but Beware

Idahoans beware! Don’t get sucked into loan modifications programs – low interest rates, new refinancing programs and emails still require consideration before you fill out the forms.

Boise resident, Keith Jacobs saw some red flags, and so he called to ask about loan opportunities, curious if he qualified.

“We followed up on an e-mail from The Brunty Law Firm, Myrtle Beach, S. C., about a loan modification service,” he says. “The subject of the email was how to Obtain Mortgage Relief from Bank of America, due to the Obama ‘Bailout.’”

Jacobs, after calling the law firm, did all the right things. He asked a lot of questions, heard a lot of answer, talked about the current loan he has with Bank of America, talked about fees. It was determined his current situation would be a good fit for this program.

“We agreed to look over the information and the contract to be provided by Brunty Law Office,” he says.

The law firm sent some generic information on loan modification, a contract, an advance payment for $3000, and a BBB Business Review Report on Brunty Law Firm.

“RED FLAG!” Jacobs says. “[They] did not include a contract for The Loan Modification Program!”

He didn’t stop there. He contacted the BBB to find out the credibility of the Brunty Law Firm. The firm is a BBB accredited business with a ‘A+’ rating and could provide this service.

Customers nationwide have turned to Better Business Bureau, state attorneys general and the Federal Trade Commission with similar concerns. The FTC has issued multiple warnings about loan modification and forensic audit scams. BBB registered approximately 1,400 complaints against loan modification companies in 2011.

Consider the following tips:

· Talk to your lender. Before paying an outside company to negotiate with your mortgage provider, try to get some relief yourself for free. Many companies will work with a consumer to avoid foreclosure.

· Use a licensed company. Any business offering loan modification services must be licensed. Search the agent or company name in the National Mortgage Licensing System to ensure you are not dealing with a scammer.

· Know where to turn. If you feel your mortgage provider is treating you unfairly, file a complaint with Idaho Department of Finance or by phone at 1-208-332-8000. The FTC also recommends consumers call 1-888-995-HOPE to get free personalized advice from housing counseling agencies certified by the U.S. Department of Housing and Urban Development.

· Start with trust. Check out the company’s BBB Business Review at bbb.org to see its BBB rating, complaint history and more.

· Report fraud. If you have been scammed, report your experience to BBB, the FTC; or your state attorney general.

· Watch for red flags. Here are warning signs that a loan modification offer may be a scam, including:

· guarantees to stop the foreclosure process — no matter your circumstances;

· instructs you not to contact your lender, lawyer or credit or housing counselor;

· collects a fee before providing any services or accepts payment only by cashier’s check or wire transfer;

· encourages you to lease your home so you can buy it back over time;

· recommends that you make your mortgage payments directly to loan modification company, rather than your lender;

· urges you to transfer your property deed or title to the company;

· offers to buy your house for cash at a fixed price that is inappropriate for the housing market;

· pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

To check the reliability of a company and find a trustworthy business, visit bbb.org.