Avoiding mortgage modification scams.

Posted By Paul

A friend of mine got a letter in the mail giving a contact number and suggesting that they could help lower his mortgage payment.

He decided to call and they essentially said they were lawyers who would re-negotiate his mortgage at a lower rate. This service would cost $3000. They asked him who his mortgage was with and when he said bank X they said that they had worked with them before to negotiate 30 year fixed mortgages at a great rate.

Being smart, he called his bank next and asked if they had ever heard of this law firm. They essentially said:

1) They had never heard of this firm.
2) They don't offer a 30 year fixed mortgage.
3) They would be happy to renegotiate his rate directly.

Based on this he decided to not call the lawyers back. He discussed the terms of his mortgage with his bank, and they gave him some options that he is considering.

Then just today I saw an article on avoiding mortgage modification scams. It sounds suspiciously similar to what my friend experienced. I wonder what would have happened IF he had decided to go forward and give them the $3000. Maybe they would have just disappeared with his money, or perhaps done some hand waving to make it look like they did a bunch of work to get him the same rate and terms that he got by just calling the bank directly. My friend gave them his email address and they sent him the list of info he would have to gather for them to proceed on his behalf and it was an identity thief's dream (tax returns, pay stubs, etc.).

I suppose it's possible that this people were for real, but I think you really can't be too careful these days, especially when calling someone that sent you a random letter in the mail.

Here is the article on avoiding these scams:

Avoiding mortgage modification scams

Also here are two stories I read about people who fell for these scams and how they ended up losing their homes:

Mortgage scam snags Idaho couple

Chicago owner loses home in mortgage scam

Article: Do the right thing in a recession

Posted By Paul

This is an article I found on CNN Money that I thought did a great job of addressing the "moral hazards" of money. There is lots of info out there on how best to deal with your money from a fiscal standpoint, but this article addresses what you should do from a moral standpoint.

I liked the fact that the article highlights the idea that you shouldn't feel too guilty about the financial impact of dropping a service (housekeeper, landscaper, etc.) if it's a service that you can't afford right now. I also liked the fact that it specifically calls out that when making choices your first obligation is always to the loved ones that you support.

I also liked the fact that it mentions the idea that helping someone out of a financial bind isn't always helpful in the long run. This reminded me of a previous post:

Millionaire Next Door Review Pt 3: Economic Outpatient Care

The idea that by helping someone out of a financial bind you are shielding them from a lesson that perhaps they needed to learn.

Here are some highlight quotes from the article:
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Where should your budget ax fall?
But there are three principles to keep in mind. One is that sacrificing is a necessity, not a punishment. It's to be expected of everyone, and you can't feel guilty about not underwriting what you can't afford. Second, family comes first. As concerned as you may be about your housecleaner -- or your favorite charity -- your first obligation is to the loved ones who depend on you.

Finally, remember: Opportunity is priceless. Sell your jewelry, sell your car -- whatever you need to do to be able to invest in your child's future.
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What do you do about budget-busting friends?
There is absolutely no disgrace in looking a friend in the eye and saying, "I'd love to do that, but right now I can't afford to." If your pals aren't understanding, shame on them.
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Who should get your bailout bucks?
As for others more worthy, try to help them (a) if you can and (b) if their request seems reasonable -- reasonable to ask of you and reasonable in that the situation genuinely merits intervention.

The quotes make more sense in context of the full article:

Do the right thing in a recession

Article: Car Dealer Tricks to Watch For

Posted By Paul

I read this article and thought it was interesting. I thought the one about Eavesdropping was actually kind of clever.

Car Dealer Tricks to Watch For

Has anyone caught a dealer trying any of these?


For a related article see an earlier posting:

Article: 6 Things You Should Never Tell A Car Salesman

Article: Get your spouse to stop overspending

Posted By Paul

Here is an article I enjoyed that was talking about managing a spouse who is more free with spending than you would like.

It's a short article but it reminds me of what one married couple I know did as a way to manage their money. They had a fairly common system where one spouse (in this case the wife) handled most of the day to day money issues (she wrote the checks for the utility bills and mortgage, etc.). The husband was sometimes prone to overspending and that frustrated her.

What she did was that she made sure that the husband helped with the check-writing (she wrote the checks and he entered them into the checkbook), so that he could see and realize that they were spending too much money. By actually seeing the checkbook balance shrink (and sometimes go negative) he was able to see the consequences of his actions. Prior to that his spending was something he would hear about through his wife but it never sunk in until he got involved in the process.

Here is the article:
Get your spouse to stop overspending