Individuals facing overwhelming mortgage payments may be able to avoid foreclosure through loan modification. However, convincing a lender to change mortgage terms can be difficult.
Many scammers know this and try to profit from homeowners’ desperation by offering a quick mortgage fix that they cannot provide.
What is mortgage loan modification?
Under loan modification, homeowners struggling financially may be able to negotiate new mortgage terms with their lenders. Adjustment options may include modifying the existing interest rate, lowering monthly payments, extending the length of the loan or, more rarely, decreasing the loan’s unpaid balance.
What entities can help with loan modification?
Companies that offer debt adjustment services must have licensure through the New Jersey Department of Banking and Insurance. Examples of businesses that have legal authority to handle loan modifications include:
- The loan provider/owner
- The loan provider/owner’s mortgage service company
- A nonprofit corporation with debt adjuster licensure with the DOBI
What are signs of potential loan modification fraud?
In general, it is a good idea for homeowners to be careful if a company makes a loan modification offer that seems too easy or too good to be true. Borrowers should also be wary if a business requests a large, up-front fee for modification services or gives instructions to stop making mortgage payments without contacting the lender. Borrowers should also be wary of companies that give instructions to make future payments to a different company/individual without informing the lender
Homeowners seeking mortgage modification services should be sure to check that the company they work with has a debt adjuster license with the state Department of Banking and Insurance. Borrowers can find a listing of licensed loan modification businesses on the DOBI website.