Updated October 2023
A Warning Regarding Loan Modification Scams
With the recent increase in New Jersey foreclosures, there has been a rise in fraudulent companies claiming to offer the following:
- “Loss Mitigation Consulting”
- “Foreclosure Prevention”
- “Mortgage Loan Modification”
- Any related service where the company is offering to negotiate your loan with your lender in exchange for upfront fees.
The New Jersey Department of Banking and Insurance receives complaints that these companies post advertisements and send direct mailers and other forms of marketing and solicitations to homeowners who have been served with foreclosure papers. These companies say that they can help. However, many are not properly licensed and are not legally permitted to offer these services in New Jersey. Homeowners are cautioned not to work with companies and individuals that are not in New Jersey, and to only deal with companies and individuals that are properly licensed in New Jersey.
It May Be A Loan Modification Scam If:
If a company reaches out to you with promises of a loan modification or foreclosure prevention, it’s a good idea to look out for the following red flags, as they may be indications of a possible loan modification scam:
- You get a letter that looks like a modification pre-approval.
- You get notices that look like they are from the government.
- You get notices that look like they came from a mortgage company.
- They tell you that you are about to lose your home.
- You cannot speak to the attorney that is handling your file.
- They promise a 2% interest rate.
- They promise principal reduction loan modifications.
- They tell you that you don’t need tax returns.
- They tell you they can lower your payment without taking any information from you.
- They are not an NJ-licensed attorney or an NJ-licensed debt adjuster.
- They are not located in NJ.
- They are not prepared to help you go to Court or stop a sheriff sale.
- They ask for upfront fees without providing any services. They will sometimes claim you have a limited amount of time to pay the fees and secure the great deal they are offering you.
- They make guarantees that sound too good to be true: if they promise to stop your foreclosure or get you a loan modification regardless of the circumstances, or claim that 90% of their clients got good results, be wary.
- They tell you not to contact your lender or attorney.
- They tell you to make payments directly to them instead of your lender. Homeowners in debt should only be making payments to their lender.
- They pressure you to sign papers you don’t understand or haven’t read.
- They accept payments only by wire transfer or cashier’s check.
Who is Permitted to Provide Loan Modification Assistance?
Loan modification assistance in New Jersey can only be offered by a licensed attorney or licensed debt adjuster. According to the New Jersey Debt Adjuster Act, a debt adjuster license is required in order to act as an intermediary between a borrower and lender to alter the payment terms of a loan. If the person contacting you is not a licensed attorney or debt adjuster, they cannot legally provide the loan modification help they are offering. Additionally, unless the individual assisting the homeowner is a New Jersey licensed attorney, they are not permitted to accept any payments until the modification is received and accepted.
Beware of Loan Modification Scams
Going through foreclosure is very stressful, and it may be tempting to take help wherever you can get it. However, in New Jersey, no one is permitted to take money to work on loan modifications unless they are a licensed attorney or licensed debt adjuster.
If you work with an unlicensed out-of-state company, you risk:
- Payment of upfront fees or monthly fees.
- Paying fees without any services rendered with no protection from a surety bond.
- Loss of crucial time during the foreclosure process, during which a licensed attorney would be able to help you.
- In some cases, loss of title to your home. Scammers will sometimes trick people into surrendering their title.
- Damage to your credit profile.
Report Foreclosure Fraud
How Can I Avoid a Loan Modification Scam?
Fake loan modification companies are aiming to take advantage of people in a stressful time. Seeking or accepting help from these fraudulent and unlicensed companies can end up costing you a lot of time and money in an already difficult situation such as foreclosure, without receiving any help in return. In many instances, homeowners who fall victim to a loan modification scam pay thousands of dollars and do not receive any assistance, and are left facing a sheriff sale without any representation.
Make sure that you are receiving assistance from a New Jersey licensed debt adjuster or attorney. Contact Ira J. Metrick today for experienced loan modification assistance. We can help you access your loan information and figure out which loan modification options are available to you.