Foreclosure Prevention Fraud

I want to touch upon a subject that has come up a few times in the news recently, namely, fraud in the foreclosure prevention arena. 

If there is one thing we know about scam artists its that they like to target people who can least afford to be scammed (except those Nigerian kings - they're happy scamming anyone).  This certainly applies to those going through the foreclosure process.

One of the most popular scams is when a "loan modification company" informs the homeowners that they need an upfront fee in return for their help in reducing the mortgage payment.  Typically, these scammers will promise interest rates down to zero percent and principal reductions.  If this is the case run - don't walk away because 95% of the time you are being blatantly scammed.  The reason is loan modifications take a ton of paperwork and most people don't qualify.  If you do qualify for a loan modification that almost always only affects the interest rate - it is extremely rare to get a principal reduction on a loan modification. 

The worst thing about this fraud, however, isn't the money that you are out up front its the time that you have lost.  Often times the homeowner thinks everything is going along swimmingly only to find out as their house goes to auction that they have been scammed.  Once the house is in auction that's all she wrote and the house goes to the highest bidder.  Not only is the homeowner out their initial investment but they have lost the chance to avoid having a foreclosure on their permanent record.