How to Detect Mortgage Relief Fraud

By Sarah Parr

Mortgage relief scam artists know how to give homeowners who are behind on their mortgage payments courage and hope by providing them false promises. They prey on consumer need by promising guaranteed results on loan modifications or foreclosure rescue services, all while charging hefty fees. Mortgage relief scam artists know exactly which areas to target for clients, and reach out to people through traditional advertising methods. Many homeowners fall for this type of scam, and end up in worse financial shape than they were in before they sought out help from a third party.

Mortgage relief scams have increased in recent years, and they have appeared in various forms. Here are three general schemes fraudsters use when trying to scam a desperate homeowner.

Companies pretending to be legitimate

A shady company offering mortgage relief will go out of its way to appear as professional as possible. A scam artist may act as a member of a legitimate organization licensed by, or associated with, the government and claim that a homeowner qualifies for a specific government program that aids in foreclosure-rescue or loan modifications. The New York Times reports that another common scam is non-attorneys posing as attorneys and offering loan modification services. Law firms that only offer loan modification services and nothing else should raise suspicion because law firms usually provide more than one service. Some law firms even pose as non-profit groups, or offer unhelpful loan workouts or forensic loan audits.

Expensive services with little results

Some companies will scam clients by charging them to qualify for specific government programs meant to aid in mortgage relief or to access government agency-licensed housing counseling when both are technically free. When an organization asks for thousands of dollars upfront for access to the latest government program or a recent mortgage settlement, it could be a sham. Homeowners should also look out for companies that may want the homeowner to pay the monthly mortgage to them and not to the lender without notifying the lender first.

Mortgage relief scam artists will guarantee that they can definitely get the lender or loan servicer to modify a loan. The fact is, an effective foreclosure defense or loan modification is never guaranteed, and access to certain government programs is only definite for some borrowers. Lenders can determine which specific programs will work for a particular homeowner.

"Sarah Parr is a writer from Central Florida who blogs about Orlando foreclosure defense and issues pertaining to the housing industry."