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How do you avoid loan modification scams?

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Wiki User
February 25, 2010 5:19PM

Loan modification scams often operate by charging homeowners thousands of dollars up front to negotiate an agreement with the bank. But instead of negotiating a modification, the company simply takes the money, does no work for the borrowers, and refuses to provide any sort of refund.

Many states have now made it illegal or more difficult for these types of companies to take money up front before any services have been provided. In some states, a successful loan modification or other agreement (such as a forbearance) must be negotiated before the company can take any money from the homeowners.

The best way to avoid such scams is to keep on top of the laws in the state in which the property is located in regards to foreclosure service providers. As well, homeowners should look up the company's online reputation, Better Business Bureau record of previous complaints, and any complaints filed through state or federal regulatory agencies.