An organization devoted to preventing fraudulent loan modifications reports that consumers have filed 20,000 complaints against loan modification businesses since March 2010.
Homeowners who have fallen behind on mortgage payments and want to avoid losing their homes in foreclosure are being preyed upon by remorseless business operators who take large upfront payments. Later on, the homeowners discovers that the loan mod companies were run by con men who took their money and did nothing in return (see Warning to FHA Borrowers – Avoid Fraudulent Forensic Loan Audits, Loan Mods and Foreclosure Scams).
All consumers should be on the alert not only for loan scams but also numerous other types of fraud that have become rampant in a weak economy. According to Prevent Loan Scams, many of the fraudulent practices prevalent today focus on consumers who are already suffering financial distress and can least afford to be victimized.
Consumer fraud — the intentional deceit of a consumer — is nothing new, unfortunately. For decades there are have been scams related to mortgage loans, credit cards, employment opportunities, lotteries and identity theft, to name just a few. But in recent years, as the American economy has struggled with a high rate of unemployment, a collapsed housing market and a stubborn recession, scammers have seized on Americans’ financial fears in new ways.
“There are a suite of scams that concentrate on people that suffer financially and we’ve really been going after those,” says Steven Baker, director of the Midwest region of the Federal Trade Commission. “Certainly it’s an increasing problem of people taking advantage of that suffering. It’s really bad because you’re holding on by your fingernails in the first place and then they steal what little money you have left.”
To avoid becoming a victim of fraudulent business practices, a consumer always needs to remember that when “something sounds too good to be true, it usually is.” Most scams are carefully structured so that they sound believable to a prospective victim. Before agreeing to provide any personal information or making any payments, a consumer should carefully research the company that they plan on doing business with.
Distressed consumers who are having trouble making mortgage payments have absolutely no need to pay someone to help them avoid foreclosure or restructure their mortgage payments since these services are already provided for free through HUD-approved housing counselors.
preventloanscams.org
Consumers who suspect that they have been taken advantage of by predatory and fraudulent business practices should contact preventloanscams.org or call the Homeowners HOPE Hotline at 1-888-995-HOPE