How To Not Be a Victim of Mortgage Servicing Fraud in Foreclosure

Loan servicing encompasses all of the actions and responsibilities that must be carried out after a loan has been approved until it is paid off. Loan servicing is usually done by a company specializing in this type of work, but the lender can also do it. It may include services such as:

• Billing the borrowers every month
• Receipt and recording of payments
• Keeping track of payments that have been missed, incomplete, or are past due
• Taking care of collections
• Taking care of other difficulties, such as insurance claims or tax refunds

All of these chores must be completed regularly as bill payments come in. As a result, loan servicing necessitates a great deal of diligence and attention to detail on the side of the servicing organization and service officers. It’s a requirement for significant loans like mortgages.

Loan Servicing Fraud: What Is It?

The use of misinformation, dishonest assertions, or misleading methods by the loan servicing organization is called loan servicing fraud. This is frequently the case with phony or sham businesses set up purely to commit loan fraud. The following are examples of loan servicing fraud:

• They are obtaining service rights illegally, as lenders frequently sell servicing rights to service agencies.
• Falsifying information about collections or debt
• Intentional non-compliance with contract terms
• Collections for debts that have previously been paid or for debts that do not exist

Attempting to collect the debt even though a current judicial procedure has placed an “automatic stay” on collection efforts; creditors, for example, usually cannot collect on debts if bankruptcy has been filed.

In addition, violations might occur if the creditor tries to complete debt servicing obligations by using force, threats of damage, or unfair commercial tactics. State and federal laws must be followed in all loan servicing activities.

Scams Regarding Mortgage Relief

Scammers promise to renegotiate your mortgage loan or take other actions to save your property, but they never follow through. Never pay a firm in advance for claims to assist you in paying down your mortgage.

Your Rights Regarding Mortgage Assistance

Scammers prey on homeowners who are desperate to escape foreclosure and keep their houses. These con artists claim to get your loan modified so you may keep your home. However, they want an advance payment before providing any services or providing any results. It’s not a good idea. It’s illegal for a company to charge you upfront for promises to help you get relief on paying your mortgage. If you’re working with a lawyer, make sure they’re licensed in the state where you live and are reputable.

If a company offering help with your mortgage debt doesn’t follow these rules, it could be trying to scam you. Here’s what to know about your rights.

You don’t have to pay any money until the company delivers the results you want. The Mortgage Assistance Relief Services (MARS) Rule says it’s illegal for a company to charge you a penny until it’s given you a written offer for a loan modification or other relief from your lender — and you accept the offer.

The company must disclose essential information to you. If you decide to accept your lender’s offer, the company must

• give you a document from your lender showing the changes to your loan
• clearly tell you the total fee the company will charge you for its services
• If you stop paying your mortgage, you risk losing your home and damaging your credit.
• The company’s advertisements and telemarketing pitches must state this clearly.
• They’re not affiliated with the government, and neither the government nor your lender has approved their services.
• Your lender may refuse to modify your loan.

The corporation can’t tell you to stop communicating with your lender. You always have the option of contacting your lender directly to check if there are any other solutions available to you. Companies that tell you not to contact your lender are breaking the law.

Mortgage Relief Scams: What They Are and How to Avoid Them

The following are some of the most common warning indicators of a mortgage relief scheme:

• Before you receive any services, scammers will demand payment in advance. That’s illegal, and it’s a red flag to stay away from them.
• Scammers may demand that you pay by cashier’s check or wire transfer only. Scammers prefer you to pay this manner since it is difficult to recover your funds.
• Scammers may try to convince you to transfer the deed of your home to them. The deed is a legal document that establishes who owns a property.
• Scammers invent various scenarios to get you to pay them money. You can avoid them if you are aware of some of their ruses.

False Counseling

Scammers claim to be housing counselors, lawyers, or representatives of a law company, or they are from the government. The con artists claim they’ll take care of all the details of an agreement with your lender to cut your mortgage payments or keep your house from going into foreclosure. They’ll usually advise you to avoid contacting your lender, lawyer, housing counselor, or credit counselor. They may advise you to pay your mortgage payments instead of your lender or transfer your home deed to them.

The con artist takes your money and never pays your lender, causing your debt to default.

The con artist stops answering your calls and walks away with your money. If you employ someone who claims to be a lawyer, check sure the lawyer is both licensed and reputable in your state. Just because the firm employs a lawyer doesn’t mean it has the authority to charge you an advance fee or that it is authorized.

Forensic Audits That Aren’t Real.

Scammers claim to be “auditors” of mortgage loans, “foreclosure prevention auditors,” lawyers, or other specialists. They’ll look over your mortgage paperwork to check if your lender followed the law. According to them, the audit can help you prevent foreclosure, speed up the loan modification procedure, reduce your debt, or even cancel your loan.

Scammers cannot guarantee that a forensic loan audit will assist you in obtaining a loan modification or other form of mortgage relief.