If That Principal Reduction Program Sounds Too Good to Be True, Believe It
Seems that there are more rumors in the world of Loan Modifications than there are truths. Principal reduction is one of those rumors that spreads like wildfire, making the phones of Northern Virginia Short Sale Agents like myself, ring off the hook.
The old adage is a good one to follow when hearing a rumor like principal reduction from "a friend." If it seems too good to be true, it probably is.
My mother used to tell me that if some guy told me he was no good for me, I should believe him. I like to think that much of my success in life, I owe to my mother. She was a smart woman. I was fortunate to be raised by her.
But why are some people so darned gullible? I ask myself that question all the time but don't have any good answers. Even after a person is informed that the person is getting ripped off, a person will still glom onto a shred of hope that it might not be true. I realize they are desperate, and desperate people will go to desperate measures, but still. Where is that little voice in their heads that the rest of us listen to?
A guy somewhere in California (but not in Sacramento) emailed me this week. He sent me a link to a website, asking if the company was legitimate. This guy, like many others in today's economy, is underwater. His home is worth less than he owes. He considered doing a short sale but then found this company that promised to refinance his home through a principal reduction program, which would knock down his mortgage by 50%.
Well, that doesn't happen in the real world. There are a few government underwater refinance programs available but, for the most part, very few homeowners qualify for them, and they typically don't reduce a principal balance by that huge amount. They also do not charge upfront fees apart from an appraisal.
The website did not contain any contact information. No list of company directors, no street address, no affiliate information apart from other websites that the scammers probably owned -- there was not one shred of identification. Just a toll free number. It also made promises that are virtually impossible to guarantee such as:
- any loan qualifies
- will report the payoff as Paid in Full
- new mortgage set at current value of your home
I Googled the name. Sure enough, found damaging evidence and sent it to the guy who emailed me. He admitted that he had already paid these hucksters $1,200. They promised him they were receiving funds from TARP and would refinance his loan through a hedge fund if he would just wait until February of next year. So, he was planning to wait. You know, I can't save this guy. But I did report the company to the Attorney General of California and the California Department of Real Estate.
Listen, if some company promises you a principal reduction program and you don't know whether they are legit, check them out. Ask a lawyer to check them out. Ask a nonprofit loan counselor to check them out. Ask your teenager to Google them, for crying out loud. And don't send them any money!
When clients come to me to do a short sale in Sacramento, the first thing I do is arm them with information from the California Association of Realtors and suggest they get legal and tax advice. If you're not getting this kind of service from your Sacramento short sale agent or you have doubts about whether your proposed agent has actually closed any short sales, call me. I'll give you the straight scoop. But don't get ripped off through a principal reduction program that is a scam.
Photo: Big Stock Photo
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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.
The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
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