Friday, March 25, 2011

Loan Remodification Scams

I wanted to put this information out there because it was something that I came across that I feel very few people know about (and then I swear I will get to the next gypsy post).  In every time of crisis there are those who will take advantage of anyone they can no matter the consequences to the intended victims.  Today I spoke with a friend of mine who is also a police officer who had no idea that this scam existed.  He didn't know because it is not common sense or knowledge that this is a scam.  I am talking about SOME of the loan modification companies that exist out there.  I say some because like every legitimate function of the world there is a 1% rule.  That is 1% cause 90% of the problems (I might get repetitious in later posts about this, but it is so true).

There are many companies out there that exist in this time to assist people in loan modifications.  They are there mainly to hold your hand and do most of the work for you.  Many people are trying to stay on top of there bills, jobs, kids, and life in general and just do not have the time or energy to be able to do the massive amount of paperwork, e-mails, phone calls, and/or meetings to go through a loan modification.  So, they hire a company to do it for them.  In many ways I view them as I do credit protection companies like Lifelock.  You can do all the work yourself, but they give piece of mind because you don't have to do the work.  But, there is nothing that either of these companies can do that you cannot do yourself.

Loan modifications were developed by the federal government in a time of crisis to assist those who need it.  They created rules and guidelines to try to keep away those that would try to take away from the system and gave those rules to the loan holders, i.e. banks.  When contacting a bank you can work with them to try to create a solution to your loan problems, or you can hire a loan modification company to do it for you.  Either way the process should take about 8 weeks, give or take a few weeks depending on the bank.

Unfortunately, there are loan modification companies that are taking advantage of this and destroying people's lives in the process.  So here is the biggest indicator that will tell you that a company is trying to scam you:

If they charge you prior to you obtaining a loan modification, then they are breaking the law!

I have investigated these crimes before and I knew that this was illegal, we even did a press release, but that only gets absorbed by a small amount of people.  I spoke with an agent with the FBI early today to confirm that my experiences are the same all over the country in regards to the practices of these fraudulent companies.  Typically the suspects in these cases hire employees to work for them and bring in clients, but never tell these employees (some have been fired for asking questions).  They advertise everywhere to make themselves seem reputable.  In the end they look good, sound good, and give a sales pitch that make it seem like a loan modification will definitely happen.

The problem is that these companies tell you to stop paying your mortgage and not to worry about letters or calls from the bank because they are just trying to intimidate you.  Some places will even forge letters from the bank to show you progress on the loan modification.  Many people get so far behind that they get foreclosed on and lose their home.  By the time people realize that the company is a sham and complaint to police the suspects are gone.  They evacuate their business, not even telling employees, and move a few miles away with a new business name.  All of this within a year of starting the first business.

On average these criminals will deceive around 200 victims before moving or getting caught.  At anywhere from $1,200 to $2,000 made from each victim these crooks will continue this activity until people realize the scam and stay away.  If they can't scam people more room will be made for the legitimate businesses.

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