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The Loan Modification Scam Crisis

It is within the context of this crisis that the scourge of foreclosure rescue scams - the "second wave" of foreclosures  -- has grown so significantly.  Before the real estate market collapsed in 2006, there was no "loan modification industry."  Today, the loan modification industry is booming. By the summer of 2007, the Better Business Bureau reported receiving complaints from hundreds of homeowners in all 50 states who had each paid up to $1,300 to con artists promising help but doing little or nothing. As an example, in 2008, the State of California received an average of 900 complaints per month, with 175 active investigations-and that was just about scams involving attorneys.  A March 2009 survey showed that 61% of California housing counselors reported it to be "very common" for homeowners to have a bad outcome with for-profit loan modification services.

Advertising is all over TV, often late at night. It is on prime-time radio in English and Spanish, as well as on the internet. It is in newspapers, on street flyers, signs and billboards, and on other direct mail solicitations. Saturation marketing, often laced with lies and exaggerations, plays on the desperation and trust of distressed homeowners. Other scammers use high pressure sales tactics and false ‘guarantees in order to extract large cash payments from homeowners.  These are the same marketing practices that were used to sell the abusive loans that scammers now seek to modify.

To help stop loan modification scammers, report a complaint by calling 1-888-995-HOPE or by using our simple online complaint form.

To learn more about becoming a partner of the Loan Modification Scam Prevention Network, click here.