BBB: Beware loan offers from unknown companies
Better Business Bureau is warning people who have been solicited by unknown companies to help reduce their mortgage payment through a loan modification or by refinancing their mortgage to do their research first.
BBB has received numerous calls this year from consumers who are confused by the advertisements and offers they have received to lower their loan interest rates.
“A large portion of homeowners are being contacted by companies that offer too-good-to-be-true promises, like a guaranteed result in reducing a payment or modifying a loan,” said BBB President/CEO Matthew Fehling. “While there are reputable companies that can work with a mortgage lender, homeowners need to be aware of who they are doing business with so they do not fall victim to a scam company.”
A loan modification is a permanent change in one or more terms of a mortgagor’s loan. The modification can range from a direct change in interest rate to the amount owed on the loan; the loan stays with the same company. Refinancing a mortgage might include changing the loan servicing company and requires fees to be paid, including for a home appraisal.
Consumers looking to modify their mortgage loans or refinancing their mortgages should keep the following tips in mind before accepting any offers:
• Call BBB to check the company’s reliability report.
• Confirm any licensing claims of the company with the Arizona Department of Financial Institutions.
• Contact your current mortgage lender and inquire about options available to you. Modifying a loan is a process that homeowners can do for free, eliminating the need to hire a company to help you.
• In order to qualify for a loan modification or to start the process of refinancing, homeowners will need to submit financial documents to the mortgage lender that shows they have the ability to make the payments.
• Homeowners should never follow advice that tells them to “stop paying a monthly mortgage payment.” A reputable loan modification company will tell a homeowner to continue making payments as long as possible.
• Homeowners should not pay upfront for a loan modification. Similar to a loan refinancing application, any fees should be paid once the loan modification is approved and closed.
If you are being offered a loan modification service; feel you have been a victim of loan modification fraud or a refinance option that sounds too good to be true, contact your BBB and check out the company at arizonabbb.org or by calling 1-602-264-1721.
