Tips About Avoiding Lending Scams

A loan modification usually means your monthly payments are reduced, either by lowering the interest rate or extending the term of the loan.

Be aware of some of the red flags of typical scams:

• Guarantees – Be wary of any company that offers a guarantee of stopping foreclosure regardless of your circumstances. Keep in mind that oral promises and agreements relating to your home are not usually binding, so a guarantee in an ad or from their representative may be meaningless.
• Up-front fees – Some companies charge a fee before reviewing your situation or making a single call on your behalf. Beware of any attempt to collect payment from you before providing a service.
• Redirected payments – Do not agree to make payments to a third-party. Some scams involve having the homeowner pay a company with the promise that they will make your mortgage payments. If they fail to do so, you have lost your money and may still wind up in foreclosure. Always make payments directly to your mortgage company.
• Buy-back or Lease-back plans – In this case, companies have homeowners sign over the deed to their home and then rent it back from the company. The terms of the agreement may require high up-front and monthly fees and failure to meet these terms may result in the loss of your money and eviction. It is important to note that transferring your title does not change your payment obligations—you are still responsible for your mortgage debt even though you no longer own your home.