Beware of HAMP Hardship Loan Modification Scams
by Richard F. from Hampden, MA USA
Ask Kate about HAMP hardship loan modification scams: If you are a homeowner struggling to make ends meet, beware of scams offering to modify your mortgage for a fee. Meet Richard who wisely questions paying $3500 to a debt advocacy organization for a loan modification. Learn how the Making Home Affordable Program teaches to spot scam artists who prey on distressed homeowners.
Richard Asks If Paying for Mortgage Modification Is Acceptable
I received a letter from a debt advocacy organization stating that they could possibly modify our home loan and save us money.
The fee for putting this together is $3500 to be paid in two payments of $1750.
I am concerned that we don't get caught up in being so anxious to find relief from our financial situation that we fall prey to a debt relief scam.
Is it an acceptable practice to pay a private legal firm to make this program available for us?
Sincerely, Richard in Hampden, MA
Kate Answers: Beware of HAMP Hardship Loan Modification Scams
I'm so glad you asked before parting with $3500.
My answer is STOP
and read this before taking action! You do NOT
need to pay for a debt advocacy organization to originate, process, or handle your loan modification.
There are the 3 reasons I say this:
- HAMP Hardship Loan Modifications can only go through loan servicers. But not just any loan servicer, only the loan servicer who currently accepts your mortgage payments has the authority to modify your terms. Period! End of story!
- Loan modifications are not a refinance. No new money is loaned. The current mortgage is not paid off. There is no new promissory note. So there is no need for a broker. Period! End of story!
- With the Making Home Affordable Modification Program (HAMP), there are no application fees and no closing costs. Period! End of story!
Free HUD-Approved Housing Counseling Services
Often though, homeowners need extra help understanding options, filling out paperwork, and communicating with loan servicers. No problem! Making Home Affordable provides such assistance at no charge. Yes, FREE
Go here to learn more about free around-the-clock advice of HUD-Approved Housing Counseling Services
How to Spot Mortgage Modification Scammers
One more thing. Here is what the Making Home Affordable Program website says about avoiding scams:
"Scammers make promises that they can't keep, such as guaranteeing to "save" your home or lower your mortgage, usually for a fee, often pretending that they have direct contact with your mortgage servicer – which they do not."
In fact, MHA says:
- Do not pay a loan modification fee to those who promise to save your home.
- Do not sign over the deed to your house to those who promise to forgive your debt.
- Beware of anyone who asks for a payment in return for housing counseling services.
- Do not make a mortgage payment to anyone other than your mortgage company.
Good luck and best wishes,
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