Loan modification scams or what are more accurately called mortgage modification scams, are still out there ripping off 1,000′s of American home owners. The Loan Modification Scam Prevention Network (LMSPN) tracked 28,000 scam victims from March 2010-November 2012 which cost them over $66 million.

Loan Modification Attorney Involvement

Amilda Dymi reported on loan modification attorneys victimizing unwitting clients in her article called, “First, We’ll Sue all the Bad Lawyers”. She quotes Linda Mullenbach of the Fair Housing and Fair Lending Project, who said she was helping “to halt a disturbing trend of attorney involvement in the scam operations.”.

Note: Read Our Top Five Mortgage Complaints!

A number of lawsuits have been filed across the country against these loan mod lawyers seeking to return any upfront and monthly monies paid and other monetary damages to put lawyers on notice these practices will no longer be tolerated.

How To Protect Yourself

Here is a few steps on protecting yourself when it comes to mortgage and/or loan modification scams.

Run from any company or person who…
1. Asks for Advanced Fees: Never pay upfront for loan mod services.
2. Promises “Save Your Home” Guarantees: No one, not even an attorney, can guarantee a loan mod.
3. Advises you stop paying your mortgage or talking with your lender.
4. Advises you send your payment to another entity other than your current servicer.
5. Advises you to transfer ownership of your property or wants you to sign blank documents.

Of course, as always, the best advice when trying to avoid a loan mod scam is to trust your instincts. If something smells fishy, run!

The FDIC put out a great pamphlet on these scams, click here to download. In it you’ll find more advice on avoid these rip-off artists and who to call if you’ve already been victimized.

Remember just because they are an attorney or have a fancy office doesn’t mean they are legit. Do your home work, ask for references, make some calls to the State Bar and other resources before agreeing to work with anyone.

Good Luck!


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