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

Hello Kate,

Beware of HAMP Hardship Loan Modification Scams
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

Ask Kate at Get-Your-Best-Mortgage-Rate.com

Dear Richard,

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:
  1. 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!

  2. 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!

  3. 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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Should I Pay National Remedy Center $4000
by: Robert W. from Fort Lauderdale, Florida

Hi Kate, I am underwater with a 192k note and property worth 100k. I have a note not backed by Fannie or Freddie and have worked for a couple of years trying to get the note refinanced with no luck.

It is with BOA and was a Countrywide note. It is an ARM and in 2 years I will stop paying principle only and the payment will more then double and I am not able to do that since I am a senior, still working, in Florida.

I am discouraged and depressed over this situation.

I recently made contact with National Remedy Center (California) who readily stated their law firm works with BOA lawyers and they could get my note down to 2.25% from 6.25% and a principle reduction that was undefined. They wanted 4k to do this. A one time only payment.

I had the check written but got cold feet and tore it up when FedX came to pick it up. Your thoughts please.

Hi Robert, Kate here...

Scroll up to read Beware of HAMP Hardship Loan Modification Scams above from Richard F. from Hampden, MA USA. I hope you will find help in my answer.

In addition, I would be leery of an offer to reduce your principal when the amount is undefined. I understand National Remedy Center would argue that all cases are different and thus the amount is not set. But that is my beef. They define how much money they require in advanced payment from you with no guarantee of success. Rubbish!

I'll end with expressing my sadness over the situation of so many homeowners who are in similar situations. Please write Congress and the President. Write your governor and your mayor. Send them this letter. Tell them your story. The plight of many American homeowners is a sad one today.

But to realize the impact of their decisions on everyday citizens, our elected officials must hear from individuals about their struggles to save their homes.

I'm wishing you the best, Kate

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