Additional Loan Modifications Scams to Watch For!
Joinder and Bait-and-Switch Scams!
Loan modifications change almost daily. Homeowners should inform themselves on the various scams to ensure they don’t fall victim to predatory practices.
Mass Joinder Lawsuit Scam
The scam artist in this scheme is usually a lawyer, law firm or a marketing partner, who will promise they can force your lender to modify your loan if you join other homeowners in a mass joinder lawsuit against a particular lender. The scammer will claim that joining this mass lawsuit will allow you to stop a foreclosure on your house, reduce your loan balance or interest rate, receive monetary damages, or even receive title to your house.
It should be noted that mass joinder lawsuits can be legitimate. In these legitimate cases the lawyers are usually paid after the lawsuit is over, on a contingency basis. In a scam situation scammers will try to “sell” you participation in the lawsuit for a fee.
The scammer has you sign “new loan modification” documents that will make your existing mortgage current but you are actually signing documents surrendering the title or deed of your house in exchange for a “rescue” loan. It’s important that you thoroughly read any document that is presented to you before you sign it.
Bankruptcy to Avoid Foreclosure Scam
In exchange for paying an up-front fee the scammer promises to negotiate with your lender or get refinancing on your behalf. But rather that contact your lender or refinance the loan he takes the fee for himself and files a bankruptcy case in you name, and usually unbeknownst to you.
Bankruptcy filing often stops a home foreclosure, but only temporarily because while filing a bankruptcy stops any collection and foreclosure, the bankruptcy court administers the case. Eventually you will need to start paying your mortgage or risk foreclosure.
In addition to losing your home you will most likely also use the money you paid to the scammer. Even worse is the fact that bankruptcy stays on your credit report for 10 years, making it difficult to obtain credit, buy a home, get life insurance or even get a job.