Now that the economy has rebounded, and consumers actually want to keep their homes, our office is seeing a surge in victims of loan modification scams. Georgia consumers need to remember that there is NOTHING these companies do for you that you cannot do yourself. All lenders have their own loan modification forms which you can request, complete, and send back to the lender. You do not need to pay someone to fill out these forms.
How Does This Scam Work?
Most of the scammers will also team up with a lawyer (usually out of state) and use the firm as proof that they can provide solutions that are not available to the average person. In truth, this is absolutely ridiculous, but unfortunately many consumers get sucked in by the backing of an attorney’s office.
The companies will tell clients to provide one or two months mortgage (which is typically $3-$5K) and that with that they will negotiate the loan modification. The client waits and waits and then at the last minute before the foreclosure date the company tells the client that the lender is being unreasonable and that they need more time. Most of these places will then tell the person to just file a bankruptcy petition to “buy time”. In some cases they tell the people to do this several times in a row and then when the scam is finally discovered the consumer cannot legally refile a case to protect their home.
What Should You Do If You Need a Loan Modification?
The first thing you should do is contact your lender. Yes, you will have to complete forms and provide proof of income such as bank statements, tax returns, and pay stubs, but considering what you are asking for this is just common sense. You can also contact non-profit organizations such as NACA who can also assist you, at no charge, with the loan modification process.
What if You Are Unable to Modify Your Loan and Are Facing Foreclosure?
Not all loan modifications will be granted so you need to prepare yourself for that scenario. The good news is that you don’t have to lose your home. You can always file for Chapter 13 bankruptcy protection which will stop the sale as soon as the case is filed. Talk with a consumer bankruptcy attorney in your area to find our what type of repayment options will be available.