Numerous homeowners have been impacted by the economic fallout from the Coronavirus crisis. Job losses and financial hardships have many stressed and strained and inquiring about home loan modifications. It’s the perfect storm for fraud and scammers to take advantage of the situation.
A mortgage loan modification is a rework of your loan by your current mortgage servicer. They will review your current mortgage and find alternatives to help you continue on with paying off your mortgage and sustain your homeownership. This can only be negotiated with your mortgage servicer and it’s important you know who that is and work only with them to conduct business. Be aware that no one else is able to make these adjustments to your loan and scammers may try to tell you otherwise.
Homeowners seeking financial relief should be aware of the following red flags as scammers across the nation make false promises of saving families from foreclosure:
- Are you being asked to pay fees in advance of loan modification services? (“up front” fees)
- Are you being assured a loan modification no matter what your exact circumstance is?
- Are you being requested to sign over the title on your house?
- Are there any documents you do not comprehend and are being asked to give signature on?
- Are you being directed to make payments for specific reasons that are not related to your mortgage lender or mortgage servicer?
- Have you been asked to stop making payments on your mortgage?
If you feel you cannot pay your mortgage at this time due to financial and/or economic circumstances brought on by COVID-19 or any other reasons, call your mortgage servicer first. This is the entity that you make your monthly payments to since they are managing your mortgage. Both Congress and the Federal Housing Finance Agency (FHFA) have approved forbearance relief efforts for homeowners who are economically impacted by the pandemic.
If you feel it’s necessary, you can also contact a local HUD-approved housing counselor in your area. The Department of Housing and Urban Development (HUD) wants you to make the right choice, using the right counsel. You can also read about the types of homeowner counseling scams, foreclosure rescue scams, fake government modification programs, and a list of “do not’s” on a special 2015 HUD Office of Inspector General bulletin here.
Additionally, the COVID-19 scam education section of Fannie Mae’s “Know Your Options” webpage is helpful. There is a phone number and other website links to report suspicious activity to federal and state law enforcement, including LoanScamAlert.org and PreventLoanScams.org.
If you have discovered you are actively being scammed — or already were scammed — you can contact your local state attorney general office for more information about state protections (and file a complaint). The Consumer Financial Protection Bureau (CFPB) has posted a list for each state.
If you are a first-time homebuyer embarking on the homeownership journey sometime soon, don’t let this scare you! Just be aware, stay on your toes, and stay safe. Ask your credit union for more information and guidance if needed.