I have made no attempts to hide my dissatisfaction with the current state of affairs involving loan modifications (see The Peoples Blog).  I am sure many of you know someone who has turned to their lender or bank in hopes of securing a loan modification, only to be turned away for one reason or the other.

 

The problems for this individual can multiply IF they continue to pursue modification through other means.  There are many predators who are more than willing to exploit the hopes of those in distress.  I hope the below list of scams may save you or someone you know from further financial complications. 

Phony Counseling or Foreclosure Rescue Scams
The scam artist poses as a counselor, stating he can negotiate a deal with your lender to save your house-if you pay a fee first. He may even tell you not to contact your lender, lawyer or housing counselor and that he'll handle all the paperwork. He may insist that you make all mortgage payments directly to him while he negotiates with the lender. Once the fee or a few mortgage payments are collected, the scammer disappears with your money.

Fake "Government" Modification Programs
Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, up-front fees to qualify for government mortgage modification programs. The scammer's company name and Web site may sound like a real government agency. You may also see terms like "federal," "TARP" or other words related to official U.S. government programs.

Bait-and-Switch
The scam artist convinces you to sign documents for a "new loan modification" that will make your existing mortgage current. This is a trick. You actually just signed documents that surrender the title of your house to the scam artist in exchange for a "rescue" loan.

Rent-to-Own or Leaseback Scheme
A scammer urges you to surrender the title of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. He may tell you that surrendering the title will permit a borrower with a better credit rating to get new financing-and keep you from losing your home. However, the scammer may have no intention of ever selling the home back to you.  Or worse yet, when the new borrower defaults on the loan, you're evicted.

 

In the coming year, the real estate and mortgage industry will undoubtedly continue to change, starting as early as January 1, 2010.  The new year will also kick-off the required use of the newly revised Good Faith Estimate (GFE).  This three page document is designed to provide the buyer with a clearer understanding of their settlement fees (a/k/a -closing costs.)  As Peoples Mortgage attempts to embrace this change for the good that it is intended to bring, we hope to expand our web site so that our customers, real estate agents and other referral sources have a trusted source of educational material regarding this new GFE.

 

We are also expecting to begin offering an expanded, home improvement program in January 2010. FHA's 203(k) mortgage will allow borrowers to purchase or refinance a home AND finance repairs and improvements.  Again, look for future updates and to our website for more information on this exciting program.      

 

And finally, this may be one of the best winters the real estate market has seen in quite some time.  The April deadline for the Homebuyer Tax Credit should force potential buyers to start home shopping sooner than the usual spring "buying season."  Providing further motivation will be the lower interest rates and the threat of an inevitable rate increase.