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Loan Modification Scams: Oregon AG Comes To The Rescue

September 2nd, 2009 No comments

Loan Modification Scams are high up in the priorities of the administration and public authorities. Loan Modification Scammers target some of the weakest members of our society, charging high fees for services that either are not carried out or offers no help to the ailing economy of the desperate home owners.

In the last months we have seen a number of institutions and AG’s hit loan modification scams throughout the country. The most recent AG to threaten and attack loan modification scammers is John Kroger, Attorney General of Oregon.

Attorney General John Kroger said that Oregons Financial Fraud and Consumer Protection Unit has “opened more than half a dozen investigations” into loan modification companies, two of these loan modification companies received a sanction.

How do these loan modification scams work?

The secret is to target the weak. Homeowners so desperate they will do anything to reduce their monthly payments and save their home. Loan modification companies and consultants will send official looking documents and cold call home owners they know are struggling with their mortgage payments.

This is not to say that all loan modification companies are useless. Some do provide valuable information and help clients make sound decisions with their home. However many use deceptive measures to dupe potential customers. For instance some loan modification companies will send paperwork that will make it look like they are associated with official government organizations like HUD o HAMP. Don’t let them confuse you. Only the bank can approve your loan modification and the government will not contact you through covert methods.

One of the largest loan modification companies, National Homeowners Assistance Services Inc. was also charged with using illegal and covert measures to receive payments they did not work for. In order to set things right the National Homeowners Assistance Services Inc. company was asked to pay $4,000 in legal costs besides changing their code of practice. These measures are designed to force loan modification companies to improve their standards of client service. Another measure some states are trying is demanding upfront bonds from loan modification companies of around $100,000 as a type of license and security for any problems the companies cause to borrowers and other citizens.

Whatever measures the government takes nothing can substitute common sense (not so common unfortunately). Make sure you use reputable companies that are truly experts in loan modification. There have been so many loan modification companies popping up like mushrooms that it seems impossible they are all experts.

Another giveaway for a loan modification company you want to keep away from is unreliable promises. Companies that promise and guarantees the loan modification of your dreams as long as you are willing to pay a “small” fee. These fees tend to be enormous making many homeowners get deeper into debt without getting any results.

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Loan Modifications Only Hope For American Dream

August 17th, 2009 No comments

The Mortgage crisis is hitting families hard all over the country with the devastating effects of a hurricane, destroying homes, affecting household economies and causing general havoc nationwide. As with all natural and human disasters everybody has a view of how to solve the situation. Some say the current crisis is nothing special, a normal depression after a market bubble where people got greedy and invested badly and that if the market is left to itself it will sort things out.
Others are of the opinion that the government must intervene with taxpayer’s money to bail out desperate homeowners and at the same time jump start the economy. Pretty much everyone disagrees on how the government should do this.

What many agree on is the seriousness of the situation. Recently President Obama said that “The American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods.”

One solution the government is investing strongly in is loan modifications. This program provides financial advice and aid to families struggling to pay their monthly mortgage payments. The plan is designed to reduce monthly payments and incentivize regular payments. To enroll in this mortgage plan homeowners must start with a three month trial. If during the three month trial all payments are made on time then they receive a cash bonus that is used to reduce the principal of the loan. After the trial period the government continues to pay an incentive to homeowners that are regular on their payments which can reduce their principal by $5,000 in three years.

This program is offered through Home Affordable Modification Program (HAMP) which is backed by $75 billion to be used to encourage and aid the loan modification program.

What are the results up-to-date?

By now there are 230,000 modifications that have already been started and the goal for November is to reach 270,000. It is interesting to note that in 2008 only 42% of the modifications by the largest servicers lowered homeowner’s monthly payments. However since March 4 with the help of the HAMP program all borrowers that receive a loan modification have seen their monthly payments reduced. This is a nice change, good news among the pages and pages of bad news that inundate our screens. However it is sometimes good to understand a situation well even thought it might be bad news in order to make the best of the bad situation.

Although Loan Modifications are being presented as the be all and end all of the current Mortgage crisis, the truth is that only a small percentage of homeowners in trouble actually qualify for a loan modification. According to the website LoanModExposed.com only 2 percent of homeowners qualify under current parameters.

It is therefore important to understand the qualifications and apply properly because a successful loan modification can reduce the principal balance (the amount you borrow and are paying interest on) reduce the interest rate and change the rate from variable to fixed and many other efficient modifications.

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