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Be Wary of Mortgage Modification Programs


"CONGRATULATIONS! You're eligible for a new mortgage modification program we're offering exclusively to homeowners in your area. We can save your home from foreclosure, cut your mortgage payments, and even reduce your principal! And you don't have to do anything! We'll negotiate directly with your lender. Our team of experienced loan modification consultants are here to help you. Call right now!-

If you're behind on your mortgage payments, you've undoubtedly received offers like this from various companies making pie-in-the-sky promises to fix your troubles. You've probably tossed out most of them, thinking they're too to be true -“ and rightly so. Occasionally though, you might find yourself chewing on one of these offers. Maybe you opened it right after opening another late notice from your mortgage company -“ which has been giving you the cold shoulder in your efforts to work out a deal to avoid foreclosure. You do need a solution, and you want to believe there's one out there.

But be wary. By and large, mortgage modification offers really are just too good to be true. With millions of people vulnerable from the crash in the housing market and the general downturn in the economy, the scam artists are coming out of the woodwork. And fraudulent "loan modification- programs are their favorite tool right now. Bestowing themselves with titles like "loan modification consultants,- these scammers claim they wield herculean negotiation powers that will bring your lender to its knees. Some can be pretty convincing. Indeed, the perpetrators are not just run-of-the-mill con-artists dipping into a new pool of potential victims; some are former real estate agents and brokers who can draw upon sophisticated knowledge and experience to make themselves sound legitimate.

Of course, the goal of the scam artists is to bilk homeowners out of as much money as possible. They usually do this by charging exorbitant up front fees and then giving their "clients- the run-around for weeks until eventually disappearing altogether without having done anything. State attorneys general have been flooded with complaints about such schemes over the last year. The Attorney General's Office in California and New York are currently pursuing numerous mortgage modification companies for fraudulent practices. The feds have also gotten involved. Earlier this year, Treasury Secretary Timothy Geithner announced the government intends to crack down on these practices, and the FBI has launched more than 2,000 investigations since.

Here's something else to consider about "mortgage modification- companies: even if you can find a legitimate one, it won't necessarily be able to do much for you. Mortgage consultants may have more experience negotiating with lenders, but, at the end of the day, they have no more power or leverage than you. Your lender simply has no obligation to work with them or you. Your lender's incentive to voluntarily modify the loan or forestall foreclosure is the same regardless of who is doing the negotiating; if your lender won't work with you, they probably won't work with a modification company. And, the longer this futile "negotiation- process goes on, the deeper into debt you'll sink, and the more hopeless you'll feel.

You really should consider bankruptcy as an alternative. Unlike the powerless mortgage modification consultants, the bankruptcy laws actually do have the power to stop foreclosure and help you get caught up on your missed payments. Bankruptcy can also help you deal with other unmanageable debts, giving you the chance to revamp your entire financial portfolio and make a completely fresh start. So, before you hire a mortgage modification company to do the same thing you can do -“ with no guarantee of a different result -“ call a bankruptcy attorney.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) +1-919-646-2654, to set up a free, confidential debt consultation. Visit for more information.

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