According to RealtyTrac, the leading online marketplace for foreclosure properties, foreclosures were down 34% in 2011 from 2010. And the “total U.S. foreclosure activity and the U.S. foreclosure rate in 2011 were both at their lowest annual level since 2007.”

However, many homeowners who are still facing foreclosure are often turning to loan modification or foreclosure “rescue” companies for help. Unfortunately, these homeowners often find out too late that they’ve been scammed.

According to NeighborhoodWorks^® America, beware of these 4 common loan modification scams:

Phony Counseling or Foreclosure Rescue Scams

For an upfront fee, the con artist will tell you he can negotiate a new deal with your lender to modify your home loan. He may tell you to make all of your mortgage payments to him. After he’s collected your fee and a few mortgage payments, he’ll disappear.

Fake “Government” Modification Programs

The scammer will claim to work with, or be approved by, the government. Their company name may actually sound like a government agency. Their website may look real since they may mention official U.S. government programs or use government-related words. However, the fake company website address will often end with .com or .net, instead of .gov. For an upfront fee, they’ll claim they can help you “qualify” for government mortgage modifications programs, but all they’ll do is take your money and run. Always contact your lender first to see if you qualify for any government loan modification programs. Also, realize you’ll never pay for an official government program.

Forensic Loan Audit

The scammer will call himself a forensic or mortgage loan auditor. He may actually be a licensed auditor, mortgage professional or lawyer. For an upfront fee, he’ll tell you he can review your mortgage loan documents to make sure your lender compiled with state and federal mortgage lending laws. He’ll tell you that you can use the audit report he’ll prepare to reduce your loan principal or cancel your loan. However, this isn’t true. A lender isn’t required to modify your loan. And if you cancel your loan, you’ll have to repay all the borrowed money – meaning you may still lose your home.

Bait-and-Switch

The con artist “obtains” a new loan modification that will make your existing mortgage current. However, if you sign the documents without reading them, you’ll be surrendering the title or deed of your home over to the thief in exchange for a “rescue” loan.

These are just a few of the loan modification scams to avoid. If you are facing foreclosure, remember, there are trusted national organizations you can turn to for help.

If you’re looking to refinance your existing home loan, contact Grandview Lending. Our mortgage specialists can guide you through the lending process and provide you with any help you need. Remember, Grandview Lending is based on family values of honesty, integrity and sincerity.