The Risks Of Refinancing

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The prolonged economic downturn and housing market crash has caused many homeowners across the nation to have difficulty making their mortgage payments on time. With so many homeowners currently in financial distress, it did not take long before a crop of less-than-honest operators showed up promising false financial relief and too-good-to-be-true loan modifications and refinancing schemes. Unfortunately, the situation has gotten so out of hand that loan modifications are one of the biggest areas of mortgage-related fraud today.
 
Banks and loan officials have been receiving thousands of loan-modification complaints since the market started crashing in late 2008 and the problem has only gotten worse over the last four years. Even though home buyers and home sellers may think straightforward loan modifications, like the reduction of interest rates, would obviously make the monthly payments more affordable, but that is not always true anymore. A company may promise to lower your mortgage payments, but they might also tack on hidden fees and other charges in the deal. Consumers need to keep in mind that you should never have to pay upfront fees for a loan modification service, in fact, it is now illegal to collect upfront fees in most states. Consumers should also be wary of any deal that asks for advance fees for short sales, deed-in-lieu of foreclosure and other related mortgage-relief services too. The practice of charging advance fees has been around for a long time. Before they became illegal, advance fee schemes were first offered as so-called foreclosure resolutions. Over time they came to be known as loan modifications and now there are companies trying to push them as forensic audits. Despite the attractive names, any request for advance fees should be a red flag warning to consumers.
 
When considering any loan modification or refinancing procedure, consumers should always remember that there are no guarantees of success. Be wary of testimonials that sound too good to be true and don’t buy into thinking that bankruptcy is a good way to avoid an imminent foreclosure. While a bankruptcy might temporarily stall the foreclosure process, many consumers still end up losing their homes after a bankruptcy.
 
Dishonest loan modifications and refinancing offers constitute mortgage fraud and consumers that encounter mortgage fraud or any other illegal practice involving real estate should contact their local District Attorney's Office as well as the Department of Real Estate in their state. Consumers can also check with their state’s Board of Realtors to verify the real estate licenses of the firms they are dealing with and check for any history of disciplinary actions. Never pay any advance fees and make sure you know exactly who will be paid what by whom before you sign any documents.