Prevent Loan Scams

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Scammers Devise New Tactics as Homeowner Distress Grows

According to National Mortgage News, deceptive Loan Scammers are using new tactics to lure distressed homeowners into misleading agreements. At the American Association of Residential Mortgage Regulators' annual conference Yolanda McGill, Senior Counsel for the Lawyer Committee's Fair Housing and Lending Project, shared stories of loan scammers and their attempts to "pick off" borrowers while attending legitimate modification events.

For many, the government programs are too complex and take too long. As a result, homeowners are seeking alternative solutions to save their homes. Even at events where legitimate housing counselors are present, homeowners are extremely vulnerable to "predatory opportunists," says McGill. According to McGill a scammer was pulled out of a loan modification event after he was found lurking in a bathroom, looking to pick off homeowners.

Homeowners are "getting bombarded with misinformation," says McGill. Oftentimes they get the information from the sources they trust the most. Advertisements on television stations, word of mouth advice from a homeowner who was actually helped and even churches all serve as outreach tools for scammers. The Loan Modification Scam Prevention Network is working to reach out to homeowners to help them educate themselves and avoid scams.

Not all scammers are found in the bathrooms, as McGill points out, "all kinds of professionals sell people down the river. Mortgage brokers, attorneys and real estate agents play both sides of the fence." The National Loan Modification Scam database holds over 5,000 homeowner complaints, a lawyer was involved in nearly 1,500 of these complaints.