Home Loan Advice

You’ve probably seen ads around the Internet telling you that they can help you reduce your home loan payments using a government-backed mortgage modification program. I even run some here through Google’s Adsense program to help defray the costs of operating this website. However, you should be careful when you visit a site by clicking on these ads. There are a number of con artists out there who’re fooling desperate homeowners. While the government is taking action to shut down the scammers, you can’t depend upon the government to always protect you from scammers. Let’s take a look at how to spot an online mortgage relief scam.

Often the companies in these ads will misrepresent themselves as being a government agency or being officially sponsored by a government agency. They’re kind of like the old regular mail letters that look like a bill, legal notice or a tax refund. While their offer may be legitimate and they may have fine print disclosure statements that disassociate them from any government affiliation, any company using such marketing tactics should immediately raise red flags.

The most common scam is asking for money upfront for a service that’s offered free by the government or that is essentially nonexistent and/or useless. Of course, there are legitimate reasons why some money might be required upfront, such as hiring a lawyer on retainer, but you should know in these cases exactly what service your hard earned money is paying for. Always use caution and due diligence when contracting for such services. Make sure that you aren’t being sold something that’s available for free elsewhere. Also make sure that the services offered will be of value to you and are legitimate.

The worse mortgage reduction scam is a variation of an old investment con technique. While this con was previously used with the elderly on a fixed income, the bad housing market has shifted this down the age bracket to middle age people looking for mortgage relief. In this ripoff, the homeowner signs up for a payment reduction service and, instead of sending money to their bank, their ‘reduced’ monthly payment is sent to the scammer. The con artists pocket this money and the hapless homeowner may not even know they’ve been tricked until the sheriff shows up at their door with an eviction notice.

While there are legitimate companies that can help a troubled homeowner negotiate payment plans and help them manage payments, I have to strongly caution you against using any such plans. One of the keys to improving your financial condition is taking charge of your money yourself. Don’t let others, especially those who may have a profit motive, control your money. In my opinion, the only reason why you should ever lose this control is a bankruptcy or a serious long term illness. But, if you do decide to give this power to someone else, use extreme caution and carefully review the company and their track record.

Lastly, don’t assume that just because you see an ad on Google or another search engine, Facebook or another social site, a news site like MSNBC or Yahoo News or a simple blog like mine that it’s been completely checked out. These con artists are almost as good at fooling advertising space providers as they are consumers. While there is probably more that content providers could do to avoid showing ads for bogus mortgage modifications, remember, when all is said and done, it’s up to you to avoid falling for these scams. Don’t let your desperation lead you into worse financial problems.