Loan-Mod Scams

Don’t fall for a loan adjustment scam! Know the laws and your rights as a consumer.

In the last legislative session, the Nevada Legislature passed AB152, which allowed loan-modification companies and agents to be registered, licensed and bonded through the Division of Mortgage Lending. Those companies and agents are permitted to accept up-front fees, as long as they deposit them into a trust account and only withdraw them when the agreed-upon services are provided.

Don’t fall for scammers promising mortgage modification services that they never deliver. Before turning over ANY money or signing ANY paperwork, call the Division of Mortgage Lending at (702) 486-0780 or (775) 684-7060 in Carson City to see if the company is registered, licensed and bonded through the Division.

The FTC produced a video on how to avoid scams as part of its inter-agency crackdown, dubbed "Operation Loan Lies," for you to watch and download.

• Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant. Do not ignore letters from your lender. Many lenders are willing to work with homeowners who are behind on their payments.

• Contact housing counselors approved by the U.S. Department of Housing and Urban Development, who may be able to help you for free. For a referral to a housing counselor near you, Click here to visit HUD's website or call them at (800) 569-4287.

• It is illegal for foreclosure consultants to demand money before they give you a written contract and before they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.

• However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the California Department of Real Estate for review.

• Do not transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later.

• Fraudulent foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. Beware -- this is a common scheme so-called rescuers use to evict homeowners and steal all or most of the home's equity.

• Do not pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• Do not sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer" who is actually a scammer.

Homeowners who think they have been ripped off can file a complaint with the Nevada Division of Mortgage Lending through their website here.

Complaints can also be made directly to the FTC by phone at (877) 382-4357, the FTC's Headquarters or Financial Services Division in Washington, D.C., at (202) 326-2222.

HUD can set up homeowners with personalized guidance from housing counseling agencies they've certified at (888) 995-4673. More information on how to find free certified counseling services is available at HUD's guidance website or the Obama Administration's loan modification website,