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How to Spot A Loan Modification Scam

By Erik Folgate

I live in Florida, which was one of the hardest hit states by the bursting of the housing bubble. If you live in Florida, Nevada, Arizona, California, New York, or other states that experienced a rapid downturn in the housing market, make sure you don’t get sucked in by loan modification scammers.

  1. If the loan modification company wants money up front, it’s probably a scam. In the state of Florida, it is now illegal for non-lawyers to take money up front for loan modification services.
  2. If the company offers more promises and guarantees than you can handle, it’s definitely a scam. The loan modification rests in the hands of the mortgage company or bank. If they don’t want to modify it, there’s not a slick salesman on the planet that will get them to modify it. Real loan modification companies will tell you that there are no guarantees that they can help you.
  3. They claim to have an attorney in-house, but you never get to see or talk to the attorney.
  4. They try to do everything over the phone and don’t have a physical address.
  5. They should never ask for your bank account information.

Watch out for these crooks. They are running around like crazy in states with high foreclosure. They prey on those in desperate situations, the elderly, and those that do not speak English well. If you think a scam artist approached you, report them to your state’s financial department and the Better Business Bureau.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://www.facebook.com/people/Mychelle-Cortez/1681761802 Mychelle Cortez

    Dear Erik,
    I am a partner in a loan modification business. I cannot agree with you more. I warn customers about these exact issues every day. I do not even remember the number of people that have told me about horror stories, losing thousands of dollars on a scam. Keep up the good work.

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