With more and more borrowers in trouble, loan modification scams have become more common.
Scammers have a larger pool of potential victims, so the easy money is getting easier. Some scour public records to find borrowers who are already in trouble, and they call offering bogus services.
At best, these scams can mess up your credit and make it difficult to get a real loan modification. At worst, you'll lose thousands of dollars in fees along with your home.
Marketplace Money recently shared stories of loan modification scams and talked with experts about how to avoid them. A few tips:
- Only deal with HUD approved counselors
- Work directly with your lender if possible
- Be especially wary of phone and internet solicitors
Further reading:
There is a service out there called http://www.modfraud.org that helps you find a pre-screened loan modification company in your area that is actually legit. It’s a free service too.
I got a call from Brian McClain of Prime Loan Advisors (415) 230-4291. He said there are no upfront fees for loan modification services. I tried to check out the company at Ripresport.com. I also searched for forums.
I find only the Prime Loan Advisors website & telephone number.
Like many we waited in anticipation of the outcome of the Trial Payment Period plan of the loan modification workout
package. We were hopeful as they presented us with a an affordable trial monthly mortgage amount and explained that
our new payment may be just as close to this amount after the trial payment period has been completed and approved.
Well, low and behold we were approved for the Loan Modification thru Aurora Loan Services. We were so thankful &
excited when we found out and we actaully felt relieved, like a weight lifted off our shoulders. But that was short
lived as we looked thru the approved workout package and realized what they had done to make the loan amount more
affordable. And that being the key word “Affordable”. The actual loan modification breaks down as a catch 22. Yes
they reduced our monthly mortgage amount but here is what they did to get that amount to a target that we needed to
be in, in order to afford the home.
1) They Reduced our APR to 2%.
2) They extended our loan term to 40 year fixed.
3) They added all monthly payments in arears to the end of the loan.
4) They kept the loan amount the same, no reduction here.
5) They adjust the principal mortgage amount to the current marke value.
This experience is like buying a new car, they only ask you what your target monthly payment needs to be and they
make some interesting financial juggling to make that happen. They don’t actually reduce the price of the car, they
simply extend the terms, try to get you a lower rate, and possibly have you increase your down payment. It’s a well
proven system and scam that works well and has done so for decades. So now we are wondering if we should still seek
a short sale and take the loss. Because if our loan balance was never reduced to the current market, the we will
continue to pay a mortgage that builds no equity, no value, and no incentive other than to keep the roof over our
heads. We are still in a home that is worth only a 1/4 of what the loan balance currently is. Even with this loan
modification the loan amount vs the home value are still upside down. Perhaps our lender is using smoke and mirrors
and is not playing by the governments plans. Right now my wife an I feel empty inside. Let down once again by these
corrupt banking & financial institutions.
Our administration needs to be made aware of this new twist on bad loans and bad loan modifications. If anyone else
has any new info they can share regarding what is happening with their modification I’d love to hear it. Good luck
on your end.
Mr. Upside Down
I got a call from Prime Loan Advisors as well and was hesitant to deal with a modification company because of a lot of the bad publicity. Thanks Bill for your link because I checked out their status and they are in the process of modifying my loan. Prior to dealing with them, my mortgage company was nearly impossible to communicate with, always telling me to send in the same paperwork over and over again. these guys are helping me and have been keeping me posted to the progress with my bank and I’m just relieved that the harassing phone calls from american home mortgage have stopped.
Justin, great article. Many ill-informed homeowners are losing the money that they can’t afford. Unfortunately there are many registered lawyers who are being under investigation for misconduct with regards to loan modification business. This article has the list of those laywers: http://www.d0p.org/2009/10/14/loan-modification-scam-did-you-give-your-information-to-these-names/.
DO NOT DO A LOAN MOD. PLAN FOR abcde type of situations!
The 3 month trial period is a scam………..PLEASE if you are in desperation, do not pay anyone for anything. I can’t stress this over the internet but if you search for loan mods that are going or went through they are lies. Not just mine and I’m still in one right now, but hundreds that have had the time to tell the American people about the fraud by sending this. Here is a hint: you send 1200 for the 3 month trial every month: part goes to taxes, part to home insurance and the rest is in their pocket….not towards your mortgage. PLEASE SAVE YOUR MONEY AND DO NOT SPEND YOUR SAVINGS!!!!!!!!!!!!!!!!!!
A while back I googled ‘Prime Loan Advisors’ and the 3rd organic listing was this page. It took under two months for these guys to get me into a MHAP modification…they actually said it’s against the law to charge up-front fees. I did my diligence and their record is squeaky clean.
So for the average person googling this company, the first thing they see is ‘loan mod scams increase!’ Kind of misleading, don’t you think??
I can tell you right now, its not a scam.
THE 3 MONTH TRIAL PERIOD IS NOT A SCAM!! If you are dumb enough to miss your new payment, youre the worlds biggest loser s. The big thing you guys are screwing up here is the difference between ‘in-house’ and ‘HAMP/MHAP.’ The Govt ones are permanent, they cant be messed with. Inhouse modification however can be a ripoff because the bank is allowed to roll ‘perceived’ savings into the back of the loan and screw you even more. My bank actually tried that on me, guess who it was…?
I dont get it, actually I have two friends who dealt with prime loan Advisors and lived happily ever after. I mean it took a couple of months but it worked n now theyre banking! I think they are in San Francisco area?
he he.. ‘HAMP’ – ‘Help Alleviate Marijuana Prohibition!’
Prime Loan Advisors – Scam sandwich.
Why refinance and pay fees which will add to your loan balance, when you can get a loan modification for free? With a loan modification there are no closing costs, you can lower your rate to 2%, you don’t need any equity in your home, you could get a principal reduction, your credit score has nothing to do with qualifying for a loan modification, bankruptcy does not matter, foreclosure does not matter, and you can apply yourself and structure the loan modification to give you the lowest possible payment.
Learn how to apply for a loan modification and structure it to give you the best deal: There is a book called “Loan Modification Secrets” that you can get if you go to Google eBooks or it is also at Amazon which will show you how you can apply and structure your loan modification. good luck!
http://books.google.com/ebooks?id=sM_ogZNFxM0C&dq=loan%20modification%20secrets&as_brr=5&source=webstore_bookcard