In addition to the loss of homeownership for many Americans, the continuing foreclosure crisis has another dire consequence: the rise of foreclosure defense scams. A recent story from New Jersey about a family losing their home due to a nationwide foreclosure scheme demonstrates the importance of struggling homeowners needing to be careful in seeking foreclosure defense assistance.
Foreclosure scams often involve attempts to provide loan modifications to struggling homeowners. These often come from purported companies offering to assist with the loan modification process. Often, they reference the Home Affordable Modification Program (“HAMP”)–a federal loan modification program. Almost always, these scammers directly solicit homeowners through mail, the Internet, or phone. These con artists often require homeowners to pay large, upfront fees and typically do little to assist with foreclosure defense.
How should struggling homeowners avoid these scams? By staying away from any shady offer to assist with foreclosure defense. I recommend that homeowners only accept help from a reputable attorney, a non-profit organization, or a state or federal government agency. Private companies offering loan modification or other foreclosure defense assistance should raise a red flag for homeowners, if these purported businesses do not have proper credentials.
Let me add an important caveat to this advice: I’m not suggesting that those in need of foreclosure defense avoid seeking the help of anyone requiring a fee for their services. While there are many free services available for homeowners trying to avoid foreclosure, these programs aren’t the best for everyone. There are many reputable professionals–myself included–who do charge a fee for their work. Homeowners should not rule out paying someone to help save their home, but do need to be diligent in making sure that their money goes to a reputable professional.