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Educate Your Customers About Loan Mod Scams
While the Oct. 21 Beige Book showed that the economy is making modest improvements, national foreclosure filings were reported on 343,638 properties in September, a 29 percent increase from September 2008, according to California-based RealtyTrac, an online marketplace of foreclosure properties. Nevada posted the nation’s worst state foreclosure rate in the third quarter, with one of every 23 housing units receiving a foreclosure filing.
In February, President Obama unveiled his Financial Stability Plan, which included the Making Home Affordable program. The program was designed to stabilize the housing market and help 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels. As of Oct. 8, the Treasury Department and the Department of Housing and Urban Development hit a milestone of more than 500,000 trial loan modifications in progress under the Making Home Affordable program. The goal originally was to have 500,000 trial loan modifications by Nov. 1.
In the meantime, criminals have been taking advantage of homeowners still in need of loan modifications. In California alone, the number of active investigations in 2008 regarding loan modification scams increased 58 percent, mostly due to foreclosure-related complaints. Most of these scams ask homeowners for an upfront fee to start a loan modification program, charging fees of $1,000 to $3,000.
Some criminals are even convincing homeowners they can stay in the home as renters and buy their homes back later. The scammer can then evict the victim and take the home.
In response, the Federal Trade Commission has been actively trying to warn consumers about these types of scams and encourage consumers to seek out free, HUD-approved housing counselors for help with their mortgages. State governments have been actively educating consumers also, telling people not to transfer a title or sell the house to a foreclosure rescuer.
If you are interested in helping to educate your customers on fraudulent loan modification programs, click on the link below to find common types of scams, tips for identifying loan mod scams and general information you can provide your customers to keep them safe.
Kari English is associate editor of BankNews.
Copyright © November 2009 BankNews Publications