Protect Yourself from Mortgage Loan Scams

For homeowners behind on their mortgage or facing foreclosure, times are tough.  The idea of losing your home hits you in a very personal way.  At a minimum, it means scrambling to find that most basic of human needs–shelter.  But it also means so much more than just losing a building–it means losing the place where memories were made, questions about your financial future, the potential embarrassment of friends and colleagues knowing the bank took your house, and the impact on your kids.  Needless to say, homeowners in this situation face a certain amount of desperation.  Which means, unfortunately, they are ripe for exploitation by some unscrupulous businesses.

As a foreclosure defense attorney, I hate to see good people taken advantage of by banks and lenders.  But what I hate even more is seeing them being taken advantage of by the very folks who claim to be helping them.  There are many good lawyers and services out there genuinely trying to help distressed homeowners work with lenders and fight foreclosure.  I consider myself one of them.  However, there are also many scammers out there that are taking advantage of desperate homeowners.  Many of them promise the world.  Watch out for these companies and people, and always keep in mind the old adage–if it sounds too good to be true, it probably is.

The State Bar of Texas, the organization that regulates attorneys in Texas (including your’s truly), recently put out an excellent article about protecting yourself from mortgage loan scams.  I highly recommend anyone looking to hire an attorney or modification company to fight foreclosure to read it first.  Be on the lookout for these types of scams:

  • Lease-back or repurchase scams:  a company promises to pay off your mortgage, in exchange for you signing a deed over to them
  • Refinance scams:  people pose as mortgage brokers trying to get you to refinance your home; in reality, it’s a just deed transfer
  • Internet and phone scams:  a scammer convinces you to apply for a low-interest mortgage online or over the phone; you provide your personal information, and they steal your identity
  • Phantom help scams:  companies falsely claim to be affiliated with the government and government housing programs

The other major thing to watch out for is someone “guaranteeing” that they can stop a foreclosure or get your loan modified.  The bottom line is that there are no guarantees in life, and foreclosure defense is no exception.  Legitimate companies and attorneys will tell you about options and possible outcomes, but no one legitimate will promise you results. 

As a personal practice, I am always very clear with potential clients about the risks and rewards of different options, and I make sure my clients are comfortable with a strategy before implementing it.  Sometimes, that means I lose a potential client, because I won’t promise them a certain result.  I’m ok with that, and so should any legitimate company or lawyer who strives to provide a legitimate service.  Homeowners facing foreclosure have enough to worry about–they deserve candor from the folks who are offering to help them.

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