One of the biggest problems that led to the collapse of the housing market in 2007 was the issuance of adjustable rate mortgages to individuals that lenders often knew would not be able to keep up with inflating interest rates after the fixed rate term of their loans ended.
For individuals receiving social security and / or disability benefits, the idea of low monthly payments was initially an attractive offer since many individuals on social security and / or disability benefits are on fixed incomes. What these individuals did not realize was just how much money it would cost them in the future once their interest rates started to adjust.
As more and more homes fell victim to foreclosure because as interest rates began to sky rocket, more and more non-attorney operated loan modification
companies began to offer assistance to struggling homeowners.
In the years following the burst of the housing market bubble, many of these non-attorney operated loan modification companies have been revealed to be scams, but individuals continue to fall victim to these scams because they allow themselves to be blinded by the promises of being able to avoid foreclosure and lower their monthly mortgage payments.
Those same individuals on fixed incomes who were attracted to the idea of an adjustable rate mortgage all those years ago are now the perfect prey for scammers portraying themselves as legitimate loan modification companies or consumer advocates.
Being on a fixed income puts many borrowers in a difficult spot once their interest rates increase. This difficult spot makes the borrower desperate for a solution so that the idea of sacrificing basic necessities for a housing payment does not become a reality. Scammers know this and they understand this, which is why they are able to sell their scam so well.
Individuals on fixed incomes must shield themselves from the potential scammer by educating themselves on how the loan modification industry works. Here are some basic rules of thumb:
Sign nothing until it can reviewed by a legal professional. Any real professional will not pressure a person into signing anything that they are not fully comfortable with.
Don’t pay upfront fees to non-attorneys. Attorneys often charge retainers, but they are members of one of the few professions where it is customary and fully appropriate to do so. Never pay anything upfront to a non-attorney.
Don’t deal with consultants. When a consultant claims to work for an attorney, request to deal with the attorney directly. If the consultant refuses or comes up with an elaborate excuse, the borrower should turn and run. Any borrower who wants a real shot at saving their home will want to deal directly with the person handling their case. This is the only way that the attorney and client will be able to truly work together to save the home in question while maintaining attorney client privilege. Privilege never extends to non-attorney consultants.
These are just some tips that can keep individuals on fixed incomes from falling victim to home loan modification scams, but scammers are a clever bunch. Any borrower facing foreclosure should fully investigate all of their options before making any decisions that could have a huge impact on their future.