Monday, July 13, 2009

NJ Mortgage Mod Scams

Getting into trouble with your mortgage is bad enough, but then getting ripped off in the process of trying to straighten it out is even worse. We hear story after story of people falling for scams. Yesterday in The Record, in an article titled Lending nothing but woe, they try to help people steer clear from some of the more common scams. This article is helpful due to the focus on NJ specific issues. Let's take a look -

[I]t’s not even legal under New Jersey law to charge for loan modification work.

State and federal regulators have cracked down, saying these companies often:

  • Falsely suggest they are linked to the Hope Now Alliance, a federally sponsored program of free mortgage counseling by non-profit agencies.
  • Charge fees to help clients modify their loans.
  • Fail to get mortgages modified, as promised.
  • Refuse to give clients refunds.

Any request for payment is a big red flag.

"I try to tell people: Do not pay anybody," said Shirley Robertson, a housing counselor with the Paterson Task Force.


Under state law, only non-profit social service and credit counseling agencies can serve as "debt adjusters."


According to the FTC, homeowners struggling with their mortgages should avoid any company that:

  • Guarantees to stop the foreclosure process, no matter what the homeowner’s circumstances.
  • Instructs homeowners not to contact their lender, lawyer or credit or housing counselor.
  • Collects a fee before providing any services.
  • Accepts payment only by cashier’s check or wire transfer.
  • Encourages homeowners to lease their home so they can buy it back over time.
  • Tells homeowners to make mortgage payments directly to the company, rather than the lender.
  • Tells them to transfer the property deed or title to the company.
  • Offers to fill out paperwork for them.
  • Pressures homeowners to sign paperwork they haven’t had a chance to read thoroughly.
Pretty clear and straight forward advice. Hopefully this will get out there enough so that the people in need can get hold of it. Unfortunately it was in the Real Estate section - the section people often read when looking for properties but not really the go to place when you want to hold onto your current property. Maybe a front page type of story would get the info to the right people.

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