Treasury Department and the Consumer Financial Protection Bureau To Target Mortgage Modification Scams

The Treasury Department, the Consumer Financial Protection Bureau (CFPB) and the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) have announced the creation of a task force to address mortgage modification scams. Mortgage modification scams target home owners who are seeking assistance with the often byzantine process of obtaining a loan modification.

The CFPB has issued a Consumer Fraud Alert that includes some tips for recognizing and avoiding mortgage modification scams. In particular, be on the lookout for communications from companies that act like they are associated with HAMP or the Federal government. There is a consumer hotline that you can call to verify whether a company is legitimately associated with the government. The Homeowner's HOPE TM Hotline can be reached at 1-888-995-HOPE.

It is also important to note that if a company asks for money up front to help you obtain a loan modification, it may very well be a scam. In Illinois, only an attorney can ask for cash up front for loan modification assistance. Even then, only pay if you are receiving comprehensive legal services, not just a loan modification. Paying someone to assist you with the HAMP process does not guarantee a greater or lesser chance of success in obtaining a modification.

As a final caution, beware of anyone who advises you to default on your mortgage. Being in default is not required to obtain a HAMP modification, and defaulting on your mortgage can expose you to a foreclosure lawsuit. If you choose to stop paying, make sure you are aware of the consequences.

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