Mortgage modification letters in the mail are not all scams

Thousands of local homeowners are in line for mortgage modifications that could save them lots of money -- and even save their homes. Unfortunately many of the notices are being mistaken for scams. The problem? Questionable businesses are also sending out mortgage modification notices, so suspicious consumers are simply tossing everything in the recycling bin. Homeowners are suspicious because of all the foreclosure rescue fraud.

"What we tell people is be a little suspicious if you get something in the mail that is not something you've contacted your bank about," explained Certified Housing Counselor Erin Reardon at Solid Ground in Seattle.

But Reardon and other consumer advocates say because of the recent Mortgage Servicing Settlement to redress abuses by five major banks -- Ally, Bank of America, Citi, Chase and Wells Fargo -- thousands of legitimate mortgage modification letters are being mailed to homeowners who may be caught off guard. The banks are spending $25 billion to compensate homeowners.

Reardon pointed to a detailed, four-page letter from Bank Of America offering one local homeowner a three month trial period with lower payments and a reduction in principal. It's legit.

"What people should do is open any piece of mail that they get," Reardon said.

The legitimate mortgage modifications being offered in the landmark settlement include principal reduction, re-financing to a lower rate, other forms of loan modification and even direct payments to homeowners who were mislead or outright deceived during previous loan modification attempts with their banks. Failing to open the mailings and respond could leave hundreds, if not thousands of dollars on the table.

"You're missing out on an opportunity to get a payment that would be more affordable and could be the difference between keeping your home or losing it," Reardon said.

Just make sure any offer you respond to is coming directly from your bank because other companies you've never heard of are on the hunt. Scammers and predatory businesses tailor their schemes to the headlines. To them, the Mortgage Servicing Settlement is one more opportunity to profit, at the homeowners expense.

Reardon points to a one-page letter offering a mortgage reduction program. It even names Bank Of America as the homeowners actual lender and refers to the actual balance on the homeowner's loan.

"It can look very legitimate. They can have a HUD logo on them, they can know who your lender is, they can know what your loan amount is," cautioned Reardon.

But close scrutiny finds the letter is very vague, with few details about the company, how the modification program works, or the costs or obligations of the homeowner -- other than to call a toll free number promptly -- no name, title nor department provided- or the homeowner might forfeit legal rights. All huge red flags. Attempts to learn more about the sender lead to a dead in. No website and no reviews. Just an address that looks like an out of state mail drop and phone numbers answered by the same recording that provides no company name. Fine print at the bottom of the letter reveals it's attorney advertising. You can bet that attorney you know nothing is about is not offering to help you for free.

If you get an unsolicited letter offering mortgage assistance read it carefully. If it appears to be from your bank, \ get your bank's phone number from your existing loan documents and call to verify that they sent the letter, or call a certified housing counselor in your community.

If the unsolicited letter simply refers you to a phone number with lots of promises to save your home but few real details about the offer or the sender- toss it.

More information about mortgage modification, foreclosure assistance, other settlements and how to avoid mortgage assistance scams is available online.

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