California Department of Real Estate issues a new Consumer Alert - Don't fall victim to a loan modification scam!

Yesterday the California Department of Real Estate issued a new Consumer Alert to give homeowners tips to avoid Loan Modification and "Mortgage Relief" scams. I receive several calls per month from homeowners who feel that they are victims of these scams, and I can not offer much help except to direct them to report the scam to the Better Business Bureau, the California Department of Real Estate or their local law enforcement.

A few tips to make sure you do not fall victim to loan modification scam;

• Check the California Department of Real Estate website to see if a "Desist and Refrain Order" has been filed against a company you are considering working with.

• Don't believe promises that are too good to be true. No one can guarantee that a "mortgage relief" plan will be be successful.

• NEVER pay an upfront fee for loan modification services. Such fees are illegal in California. Advance fees for short sale services, deed-in-lieu of foreclosure and other residential mortgage foreclosure rescue services are also illegal under a new federal rule, with a very limited exception for fees paid to lawyers.

• Check with the Better Business Bureau, and verify the existence of appropriate licensing for anyone offering those services.

• Google the company name to see if you can find any red flags.

• A HUD approved counseling agency can provide loan modification or other mortgage negotiation services for free. There are many of them in Sacramento.