Modifying Home Loans: Fact vs. Fiction |

There’s no doubt that people are struggling to keep up with their home loans. We all read the dismal headlines regarding unemployment, tight credit, and banks and big corporations who are folding right and left. Foreclosures are on the rise and show no signs of slowing any time soon. Many borrowers are underwater on their mortgages and behind on their payments. The blame sometimes seems to fall on homeowners who bought more house than they could afford, and sometimes seems to rest on predatory lenders who cobbled borrowers into bad mortgage packages that were doomed to fail from the start. Regardless of where the blame falls, the grim story is that for lots of different reasons, more and more people have lost their homes or are in danger or losing their homes in the immediate future.

Some of the same characters, who sold homebuyers on adjustable rate mortgages or on interest-only payment plans, are now trying to sell those same home owners on scam loan modification programs. Modifying your loan to avoid ending up in either a short sale or in foreclosure, is a legitimate possibility. Foreclosures cost lenders quite a bit of money, and a short sale ends up with lenders accepting a loss on the original loan principal. So lenders are offering modification programs for home loans, but the process can be difficult for some and daunting for others. Often fear plays a factor for home owners who are behind in their mortgage payments, for others it can be simply that their loan has been sold so many times since its inception that they don’t even know who to contact in order to work out a modified payment plan or interest rate reduction.

This is where the scam comes in. Former mortgage brokers, real estate professionals, and even lawyers have been charged in virtually every State for preying on people who are in fear and desperate over the potential loss of their home. Ads in the paper and on the internet abound offering people relief from the threat of foreclosure and a restructuring of their current home loans. Most of these scam companies charge an up- front fee, sometimes in the thousands of dollars, and then either tell their clients they didn’t qualify for home loan modification or else simply close up shop and open up somewhere else under a different name. There are programs offered by the Federal government and programs offered directly from the banks and institutions that hold the notes on the loans in question, to help borrowers from losing their homes. It is best to pursue these avenues, all fear aside, rather than fall victim to con artists bent on taking advantage of people already in dire straits.

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