News Release

March 7, 2010

Contact: Judy Smith of Impact Strategies, (202) 321-2536 or jsmith@impactstrategiesllc.com

NeighborWorks America Recognizes National Consumer Protection Week
by Warning Homeowners Against Loan Modification Scams

Washington, D.C. – In conjunction with National Consumer Protection Week (NCPW), March 7-13, NeighborWorks America and its growing coalition of national government agencies, nonprofit organizations and financial institutions are empowering homeowners to combat loan modification scams. The effort is an extension of the organization’s national Loan Modification Scam Alert campaign, designed to help homeowners protect themselves against loan modification scams, find trusted help and report illegal activity to authorities. NeighborWorks America is an official partner of NCPW, a coordinated consumer education campaign that encourages individuals across the country to take full advantage of their consumer rights.

An estimated 4.5 million Americans are at risk of losing their homes to foreclosure. While many will seek relief in the form of loan modification services, too many will instead become victims of scams.

“Foreclosure rates in America are now at an all-time high and so is the need for help,” said Kenneth D. Wade, chief executive officer of NeighborWorks America. “This National Consumer Protection Week, NeighborWorks is urging community groups and businesses across the nation to join in the effort to educate homeowners about how they can guard against loan modification scams—a fast-spreading epidemic in need of immediate attention. ” 

Scams aren't always easy to spot – but it helps if you know the warning signs to look for. Here are six red flags to indicate that you may be dealing with a loan modification scammer:

1. A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.

2. A company/person guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.

1. 3. A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.
   
   
2. 4. A company pressures you to sign over the deed to your home or sign any paperwork that you haven't had a chance to read, and you don't fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.
   
   

5. A company claims to offer "government-approved" or "official government" loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.

6. A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.

Loan modification scams are proliferating at a rapid pace. Every day, scam artists prey on unsuspecting homeowners who are facing foreclosure. These homeowners are losing thousands of dollars and their homes—lured by the promise of loan modification help.

“Our campaign is based on the belief that knowledge is the best defense, which is why we’re equipping homeowners with the tools they need to minimize their risk and stop scammers in their tracks,” Wade said.

For more information, visit www.LoanScamAlert.org.

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About the Loan Modification Scam Alert Campaign
To combat loan modification scams, Congress asked NeighborWorks America to launch a national public education campaign designed to empower homeowners to protect themselves against loan modification scams, find trusted help and report illegal activity to authorities.

NeighborWorks America is working with national, state and local partners on the ground and 235 community-based affiliates. Together, they are alerting thousands of homeowners in communities at high risk for scam activity through real-life scam stories, fliers, postcards, e-cards, posters, print advertising, local PSAs, events, word of mouth and social media activity.

All national campaign materials urge homeowners who are contacted or deceived by a scam artist to report it immediately by calling 1-888-995-HOPE (4673) or visiting www.LoanScamAlert.org. The hotline and Web site also connect homeowners to free guidance from a HUD-approved counseling agency.

About NeighborWorks America
NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. Since 1991, we have assisted nearly 1.2 million low- to moderate-income families with their housing needs. Much of our success is achieved through our support of the NeighborWorks network ― more than 230 community development organizations working in more than 4,400 urban, suburban and rural communities in all 50 states, the District of Columbia and Puerto Rico. In the last five years, NeighborWorks organizations have generated more than $15 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals. www.nw.org.