Latest Posts
Home > Debt Articles > An Undercover Investigation of Mortgage Loan Modification Scams

An Undercover Investigation of Mortgage Loan Modification Scams

The National Fair Housing Alliance has issued a recent report looking into mortgage modification scams.

The report identified some of the practices I’ve written about extensively on and they do a great job of presenting examples of what they found.

From April, 2010, until March, 2011, the project identified more than 150 companies suspected of being scammers based on information from their websites and initial contact with company representatives. The partner organizations conducted 84 investigations including testing of 80 companies. The very names of many websites appear designed to mislead the consumer into believing the organization is either an authentic government department or governmentsponsored website. Many sites include the words “HUD,” “Fannie Mae,” “Freddie Mac,” “HAMP,” “Obama” or “Hope Now” in their web address or in the description of their services, in an apparent attempt to bolster the illusion of legitimacy. Some examples uncovered by the project include:

The investigation found that the market is rife with corrupt practices: firms are over-promising, under-delivering and charging for services that are readily available from nonprofit organizations for free. And, in a troubling trend, some companies are advising homeowners to commit acts of fraud against their lenders.

The analysis of the 84 test reports and investigations uncovered common tactics used by scammers to entice the homeowner to use their services.

  • 55 percent of the companies required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of the company, such as reviewing loan documents.
  • 43 percent of the companies guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations.
  • 24 percent of the companies advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders.
  • 16 percent guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans.
  • 12 percent discouraged homeowners from seeking free government supported services from HUD-approved housing counseling agencies.
  • 8 percent encouraged homeowners to create fraudulent documents or provide fraudulent information in order to improve their chances of getting a modification.

Readers interested in the full report can read it here.


Get Out of Debt Guy – Twitter, G+, Facebook

Need More Help?

Get Out of Debt Free Hotline
debt settlement helpstudent loan help

About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.


I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.

  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.