With foreclosures in New York City alone up 50% over the past year, those brokers that sold those subprime loans that contributed to the financial crisis are now "Modification Consultants". Here's what you need to know to steer clear of these characters and where to go for REAL mortgage assistance.
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Here's Their Pitch
These "consultants" scour public records and look for people in danger of defaulting on their mortgage loans and they bombard you with a barrage of mailings and phone solicitations, or they advertise as a solution to your debt problems where, for a "modest" upfront fee, they'll negotiate with your bank to bring down the rate / term of your loan. In many cases, they'll also advise you to stop paying your mortgage. Some even claim to be "licensed" to do this kind of work. According to Crain's New York, mortgage modification is one of the fastest growing job fields in the country today.
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Here's The Truth About Them
While some turn out to be legitimate, many of these "consultants" do little, if any, good.. and can potentially do a lot of harm while taking your money. First, "consultants" can't charge an upfront fee for these services - it's illegal in New York (and in 11 other states) to do so unless you are an attorney of a non-profit. Second, anyone advising you to stop making your regular payments is irresponsible, and following their bad advice can put you, more often than not, closer to the edge of foreclosure. Obviously, that's not a benefit to you! Third, once they get your money, many "consultants" do little work (if they do any at all), and are unresponsive, leaving you in an even bigger hole than you started. Finally, know that there is NO license for mortgage modification in the State of New York, and anyone who tells you otherwise is lying.
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Here's How To Avoid The Scam
Unfortunately, it's virtually impossible to tell a legitimate mortgage modification company from a shady one - the wheels of justice are turning slowly and will figure that out for us. Until the authorities have time to catch up with this scam, there are plenty of legitimate resources to turn to for your mortgage concerns. If you need assistance with your mortgage, there are qualified attorneys out there, and many of them donate their services to non-profit organizations specifically dealing with the mortgage crisis. You can find these organizations through your city and state government. As an alternative, you have the right to contact your lender and negotiate new terms for yourself! Many lenders will work with borrowers who find themselves in a hardship situation. These free and low-cost options are the best way to tackle your mortgage concerns.
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