Distressed Homeowners Avoiding Legitimate Assistance Out Of Fear of Scams

While a lot of Americans desperately need homeownership assistance, many are avoiding it, for fear of being scammed.

In times of economic struggle, it seems like scammers come out of the woodwork. Some unscrupulous people and businesses try to take advantage of those in a vulnerable situation by promising what the people need. Unfortunately, the housing and finance industry is full of such scams. Even more unfortunate is when people legitimately need assistance, but aren’t able to get it because they don’t know who to trust.

According to a survey conducted in May by Money Management International, 53 percent of respondents cited “fears of scams or fraudulent services” as reasons why they would not seek help from homeownership counselors.

While a certain degree of skepticism is understandable, and probably even wise, it could cause struggling homeowners to overlook potentially beneficial resources.

One example comes from a foreclosure review program launched by two federal agencies last year. In this program, lenders are agreeing to hire independent consultants to investigate any possible mishandling of foreclosures and mortgage applications, with the victims eligible to receive $125,000 or more in compensation. But as of April 20, only 4 percent of the 4.1 million borrowers who were mailed notifications informing them of their eligibility for review actually asked for one.

Another instance occurred with the Home Affordable Modification Program (HAMP). The goal of the program was to reach 3-4 million borrowers. Only 990,000 homeowners had taken advantage of a HAMP modification as of March 2012, according to HUD’s April Housing Scorecard.

The list goes on. While there are plenty of scammers out there, there are a number of genuinely helpful assistance programs for homeowners as well. If you’re a homeowner who could use some help, don’t be afraid to look for it. Just use your best judgment before agreeing to anything and don’t be afraid to do a little investigative research on an organization.

Here are a few tips to help decipher those who are truly there to help from the criminals:

• Be wary of anyone who comes door to door. Rather than let someone in your home ask if you can call a general number for the organization to set up an appointment to come in and meet with them.
• Exercise caution if someone tells you the program or assistance is only offered for a very short period of time, and that you must act immediately. While it’s true that many homeowner assistance programs do have expiration dates, for example the Home Affordable Refinance Program (HARP) is available only until December 31st, 2013, in most cases you won’t have to make a decision right away. This high pressure tactic is common amongst scammers, or even sales people offering higher than market pricing, as they are (rightly) afraid if you don’t commit right away and have time to think it through you’ll walk away.
• When solicited by direct mail, email, or online advertisement take the extra precaution of looking up the phone number for the organization either in the yellow pages or through an internet search, rather than by calling the phone number in the solicitation. This way if someone is posing to be from an agency, business, or organization they aren’t really associated with, you will expose the fraud.

About The Author:

Steph Medeiros writes for the popular BurlingtonMortgage.biz blog, covering mortgage rates and trends in the real estate market. Follow Burlington Mortgage on Facebook.