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Firm must pay $1.9 million for loan modifications scam in Massachusetts

Homeowners can avoid loan modification scams be seeking the counsel of an experienced mortgage modification attorney.

A financial firm out of Massachusetts was ordered to pay the state $1.9 million in damages for its role in a predatory foreclosure and loan modification scam. According to a recent article in The Associated Press, the firm stole at least $1.2 million from over 600 consumers. The firm targeted minorities and non-native English speakers, ultimately causing many to lose their homes to foreclosure.

More on mortgage modification scams

Unfortunately, scams like the one noted above are not uncommon. Consumers can reduce their risk of becoming victims by avoiding these red flags:

  • Payments. Any housing counselor that requires a large fee upfront to save a home from foreclosure should be scrutinized.
  • Guarantees. A guarantee that the counselor can stop foreclosure is also a red flag.
  • Signing blank forms. It is never wise to sign documents and trust the counselor to fill in the details at a later date. Do not sign forms unless they are filled in and fully explained.
  • Signing over the home. Another common scam involves signing the title for the home over to the individual or company offering assistance. In return, the company makes the mortgage payments for the homeowner and charges the homeowner rent to remain in the home.

These are just a few of the more common practices that can signal a predatory home modification counselor that is likely running a scam.

Loan modifications in Massachusetts

Although homeowners need to be wise when seeking assistance for loan modifications, it is also important to note that there are qualified and trustworthy legal and financial professionals that can help. The Attorney General of Massachusetts recommends that homeowners contact a lawyer experienced with mortgage issues to assist in this process. This legal professional can review various options, including:

  • Loan modification. A loan modification can lead to reduced payments for the home owner. Although it may seem counterintuitive, in some instances this is beneficial for the lender as well. It can result in a steady stream of payments as opposed to requiring the financial institution to take a loss in a foreclosure sale.
  • Refinancing with a new lender. Another institution may provide more favorable terms if your current lender is unwilling to refinance your loan.
  • Short sales or deed-in-lieu of foreclosure. A short sale is a sale of property that results in proceeds that are less than the amount owed on the real estate property.

Determining which option is best for you will depend on the details of your situation. As a result, it is wise for those who are facing financial struggles and falling behind on mortgage payments to contact an experienced mortgage modification attorney.

Keywords: mortgage modification