4 Mortgage Relief Scams Every VA Loan Beneficiaries Should Avoid

A recent Government Accountability Office (GAO) report called the attention of the Department of Veterans Affairs (VA) to improve their ways of protecting veterans against fraudsters who might take advantage of their situation. Veterans are highly vulnerable to scams especially if they are falling behind on their mortgage and are already threatened to lose their homes.

Too good to be true mortgage relief tactics use catchy phrases like “Stop Foreclosure Now!” “Get a Loan Modification!” or “100% Money Back Guarantee.”. However, organizations that offer these kinds of assistance inflict even more financial harm to unsuspecting veterans.

The Consumer Information of the Federal Trade Commission has identified at least four tactics that scammers employ to abuse the finances of troubled veterans.

  1. Organizations that offer fake counseling or phantom help – Be suspicious of organizations that claim to represent a law firm and ask you for a fee before they promise to help you negotiate a deal with your lender to save your home or lower your payments. Once these organizations get your money, you’ll no longer hear anything from them. Sometimes, they may insist that you make your mortgage payments directly to them while they negotiate with your lender. Just like in the earlier scheme, they may collect a few months of payment and then disappear.
  2. Organizations that offer “forensic audit” – There could be organizations that might misrepresent themselves as “auditors” who have affiliation with attorneys or experts that offer you “forensic auditing” for an upfront fee. These fake entities will claim that you can use their report to reduce your mortgage, prevent a foreclosure, expedite your loan modification or even cancel your loan.
  3. Rent-to-buy tactics – Some scammers will trick you into a deal to surrender your home title and convert you from a homeowner to a renter on your own property for you to buy it back later. If you enter such deals, you may find it impossible to buy back your home, or even worse, get evicted.
  4. Bait-and-switch – Scammers will trick you to sign documents to get another loan to keep up with your mortgage. You might find those documents too complex to understand. One of the documents you could sign actually makes you sell your home to scammers that claim to be your “rescuers.”

Mortgage relief scammers find their victims through public foreclosure notices in newspapers, the internet, or through local government files. Scammers use online and offline advertising strategies to effectively get the attention of their potential victims.

A GAO Report to the Congressional Committees is urging the VA to take actions to better protect veterans from scams. The report revealed that veterans are either charged for services that they did not receive, or they get bad investment advice. The majority of the veterans and survivors receiving pension benefits were over the age of 80. Older veterans are often most prone to financial exploitation because scammers believe the elderly could no longer make good financial decisions.

A housing counselor can give you sound advice

As a distressed veteran homeowner, it is critical to understand that you don’t have to pay a company until you get your desired results. You may only need to make payments if your lender has given you a written form to modify your loan or get any form of relief. A HUD-approved housing counselor and the HOPE Hotline are your best options to get reliable advice if you’re starting to experience difficulty with your mortgage payments. You may only need to pay a minimum fee or nothing at all if you get advice from a counselor. If you think you’re likely to face foreclosure, you may want to consult with a lawyer.

As a distressed veteran homeowner, it is important for you to understand the common tactics used by scammers to exhaust your funds. A professional housing counselor can give you sound advice if you think you’re burdened with your mortgage.