News Release

October 26, 2010

Contact: Erin Angell Collins, ecollins@nw.org, 202-220-6317
Doug Robinson, drobinson@nw.org, 202-220-2360

NeighborWorks America Marks First Anniversary of Loan Scam Alert Campaign
Urges Consumers to Avoid Loan Modification Scam “Tricks”

Washington, D.C. – As NeighborWorks America marks the first anniversary of the launch of the Loan Modification Scam Alert campaign, this Halloween season NeighborWorks would also like to remind homeowners to beware of the “tricks” that loan modification scam artists are using to fleece homeowners in danger of foreclosure out of cash, equity, and even the deeds to their homes. 

With a national unemployment rate hovering around 9 percent, increased confusion in the marketplace surrounding foreclosure processing and bank foreclosure freezes, loan modification scam artists continue to adapt their messaging and high-pressure sales tactics to take advantage of homeowners who are struggling or unable to make their mortgage payments each month.

“Loan modification scam artists are slick and relentless.  They are using every trick in the book to prey upon homeowners during a very stressful time,” said Eileen Fitzgerald, Chief Operating Officer of NeighborWorks America.  “Consumers need to learn the warning signs of a loan modification scam, and report the scam artists that they encounter so they can protect themselves, and their friends and family, when seeking a solution to foreclosure or seeking a loan modification.” 

Loan modification scam “tricks” aren’t always easy to spot; the warning signs include:

• 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.
• 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.
• 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
• 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.

Where should homeowners turn when facing foreclosure or seeking a loan modification?  The right people – HUD-approved nonprofit housing counselors in their community. Nonprofit housing counselors are excellent, and free, resources available for homeowners facing foreclosure. Counselors work one-on-one with their clients to examine their financial outlook and determine the best option for the homeowner, whether it’s a loan modification, forbearance, or any other tools that their bank currently offers to homeowners in danger of foreclosure. To find a nonprofit housing counseling organization in your community, visit www.LoanScamAlert.org.  Homeowners can also call the HOPE Hotline at 888-995-HOPE (4673) to speak to a HUD-approved nonprofit housing counselor 24 hours a day, 7 days a week in English, Spanish and 20 additional languages.

For more information about loan modification scams, the warning signs of loan scams, and the Loan Scam Alert campaign, visit www.LoanScamAlert.org. Consumers can also report loan modification scam artists on LoanScamAlert.org. 

The campaign web site is also available in Spanish at www.AlertaFraudedeHipoteca.org.  Campaign materials are also available in Chinese, Korean and Vietnamese.

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 235 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.