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Three ways loan-modification and weight-loss scams are similar

Barbara Floyd Jones, senior manager, national homeownership programs | 10/29/2015 12:23:22 PM

In 2009, when Congress asked NeighborWorks America to develop a public education campaign to fight foreclosure rescue scams, both foreclosures and scams that took advantage of them were rising at an alarming rate in communities across America. Some cities – like Los Angeles and Miami – were even considered “under siege” when we launched the Loan Modification Scam Alert six years ago this month. Like overweight people who want quick-and-easy weight loss, struggling homeowners jumped at offers to painlessly save their homes.

Barbara Floyd Jones interviews man on the street about loan scams
Barbara Floyd Jones interviews a passersby about loan scams.
As we celebrate six years of educating homeowners about loan-modification scams and how to report them, some “truths” have become clear. For public education campaigns to be successful, ongoing communication is critical to maintain awareness and move consumers to action. More than 46,000 homeowner scam reports have been logged in the Loan Modification Scam Prevention database, yet we know that is smaller than the real number.We must continually encourage homeowners to seek help and report scams.
This communication must reach consumers where they are and in a way that speaks to their hearts, not our minds. And it takes repeated education over a long time to really sink in. When an organization or company has a large marketing budget to raise awareness, the time required can be slashed. Take Tidal, for example. Its campaign launched only seven months ago, yet word of the new music-streaming service quickly spread. However, large marketing budgets are rare for public-education campaigns.
We also have realized there are three ways the campaign against loan-modification scams is similar to the fight against weight-loss scams. Understanding these similarities helps us better educate consumers on how to protect themselves.
1. Consumers are willing to pay for quick solutions

Hoping that diet pills will lead to fast weight lossMarketers of product after product claim that consumers can lose weight and get the tight, lean body they want without altering their diet or level of physical activity. Despite repeated warnings from health professionals and fitness trainers, consumers have been willing to pay for the allure of quick results. Likewise, many homeowners are willing to pay hundreds, even thousands, of dollars for a quick solution to their mortgage troubles. We have learned that telling homeowners not to pay is not enough. They want to keep their home, even if that means paying for a loan modification that is free. However, when homeowners learn it’s illegal for a company to ask for payment before a loan modification is approved by the servicer, that’s a fact that usually penetrates.
2. Success testimonials give consumers hope despite the odds

Consumers respond well to most “customer testimonials” about how successful a product or service was for them. We’ve all seen before-and-after pictures of someone who lost 100 lbs., allegedly by taking pills that guarantee dramatic weight loss in a few months. However, reports abound of such photos being used out of context—such as depicting weight loss that occurred over a year rather than a couple of months, or that required the help of dietary modifications and exercise as well.. Likewise, advertisements from companies touting a 95 percent success rate in obtaining loan modifications and featuring success testimonials as “proof” offer the same ray of hope for homeowners, some facing pending foreclosure or auction dates. The good news is that success testimonials also are effective in illustrating the benefits of housing counselors. Asking homeowners to share their own stories in a before-and-after narrative helps others understand how such services can help.
3. Media interviews can debunk myths and scams

Many consumers have been willing to pay for ineffective weight-loss products until they see interviews with health professionals disputing the product’s claims or read about consumers who have filed lawsuits against the company. Many people also believe the myth that something you pay for is better than something you get for free, like loan modifications. However, we have found that talking to reporters for stories that appear in print or broadcast successfully debunks such myths and provides homeowners the accurate information they need to make critical decisions that save money and their home. When a marketing budget is available, media interviews supplemented by paid advertising are critical for public-education campaigns. If the budget is tight, ramp up the media interviews.   
Public-education campaigns can be a challenge, since most strike to change behavior. But with persistence and ongoing communication in multiple formats, campaigns like Loan Modification Scam Alert help turn the tide.

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7/22/2017 8:02:48 AM

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