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Loan Modification and Loan Audits

If someone who is not your mortgage lender promises to save your home and asks for you to pay money up front, WATCH OUT. Fraudulent foreclosure consultants target homeowners who are behind on their mortgage payments. Here's what you can do to avoid becoming a victim:

DON'T pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.

DON’T pay up-front fees to companies who offer forensic loan audits and promise that these audits will speed up the loan modification process, force your lender to modify your loan, or prevent foreclosure. There is no evidence to support claims that loan audits help homeowners obtain loan modifications or other foreclosure relief.

DON'T ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.

DON'T transfer title or sell your house to a "foreclosure rescuer." Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.

DON'T pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.

NEVER sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

DO contact a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at (800) 569-4287 (TTY: 800-877-8339).

DO learn about consumer complaints against the company by contacting the Better Business Bureau. To check out an attorney, contact the State Bar at (800) 843-9053. To check out a real estate broker, contact the Department of Real Estate at (916) 227-0931.

DO check to see if a particular foreclosure consultant is registered with our office. To check registration, visit the Stop Loan Modification Fraud sub-site.

If you have lost money to a foreclosure consultant or a forensic auditor who did not provide the services that you paid for, you may wish to consider consulting with an attorney to determine any civil remedies that may be available to you. If you cannot afford a private attorney, you may wish to contact your local legal aid office. For a referral, visit the Legal Services Corporation website and click on the Find Legal Assistance tab. Another option is Small Claims court. For further information, the Department of Consumer Affairs offers The Small Claims Court A Guide to Its Practical Use.

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