With the recent rise in foreclosures, foreclosure-related scams have exploded onto the real estate scene. These so-called "foreclosure rescue companies" claim they will help save your home, but in reality are out to make a profit -- at your expense. Don't become one of the victims of mortgage modification fraud! Here are some of the common warning signs that the business you're talking to might be a scam:

1. Advanced Fees. You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a "foreclosure consultant", as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property. If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. Don't use companies that require all service fees to be paid up front, and then promise to refund the money if they are unsuccessful. If you hand over the money upfront, you have no leverage to get the company to make good on its promises.

2. Promises of a specific favorable result or "Guarantee".  It's simply impossible for anyone to predict with certainty what type of mortgage modification (if any) your bank or lender will agree to. No one can say for sure that you will qualify for a modification before looking at your specific case. Any "guarantee" is an empty promise. Although an experienced loan modification business may have an idea of what homeowners in similar circumstances to yours have achieved, these businesses will also caution you that each situation is different and that there is are no "sure things" when it comes to getting a modification. The old adage applies here: if it sounds too good to be true, it probably is.

3. Boasts of huge Principal reductions. You should be wary of a loan modification business which brags about frequently negotiating substantial principal reductions. Although principal reductions are a part of some mortgage modifications, they are relatively rare (and large principal reductions are even rarer). The reason is fairly simple: banks and lenders are reluctant to "give away" money, and often a combination of reducing interest rates and extending the term of a mortgage will achieve the goal of making it affordable to the homeowner, without having to resort to principal reductions.

4. High-pressure sales tactics. It's true that if you're in a financial bind, you need to take decisive action. However, high-pressure sales tactics from a business which is offering a loan modification should be a big red flag: the reality is that unless you're facing an immediate foreclosure, you have time to do the research required to get a good deal and find the right expert to help you. Reputable businesses will be comfortable with you speaking to their competitors and comparing fees; scammers are not. Keep in mind that the loan modification process won't happen overnight: you'll be talking to this business numerous times over the course of the negotiations, so make sure you pick a company you feel comfortable with. A business trying to pressure you to sign an agreement immediately probably isn't a business you'll be happy with two months from now.

5. Use a legitimate company.  Make sure your company has a physical office space (no online companies). A legitimate company will ask the borrower to complete a detailed application out lining their income, monthly expenses, mortgage information, and information about the economic hardship they have experienced. Based on this information the modification company will decide if the borrower is a good candidate for a loan modification. if you have already tried to get a loan modification independently with a lender and have been denied chances are that a company will not be any more successful. However, loan modification companies claim that they will be more successful than borrowers on their own. In some cases this is true because legitimate loan modification companies have skilled workers who specialize in loans, but if a borrower is not eligible for a loan modification that is the bottom line.

6. Can't back up references/testimonials. Financial transactions are private matters, it's true. Businesses which claim to have happy customers, however, will be glad to share specific customer testimonials and may even have former customers they can put you in touch with who can describe their experiences.

7. Bad track record. It seems basic, but many homeowners don't know where to check to see if a company they're dealing with has complaints lodged against it. Since each state's licensing requirements for performing mortgage modifications are different, it's important that you find out what your state requires. Furthermore, companies you're considering working with should not have a bad track record with the Better Business Bureau, your State Attorney General's Office, or your State Department of Consumer Affairs. It is helpful to check out homeowner and loan modification forums on the internet as well to see if anyone has negative experience with the business you're talking to.

There is a lot of free information available to you about buying, selling, investing, or relocating in Fremont real estate. For complete information about the Fremont Ca real estate market including current Fremont homes for sale, property values, market conditions and more please visit the most complete website dedicated to everything Fremont real estate related. www.ClydeBrownHomes.com.

If you or someone you know are in need of a competent and experienced Fremont real estate agent in or near Fremont Ca, or have real estate or mortgage related questions, please feel free to contact me I will be more than glad to answer your questions. Call me at 800-839-0665 or email me at Clyde@ClydeBrownHomes.com. Clyde Brown Legacy Real Estate & Associates.

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