Beware Of Foreclosure Rescue Scams

Certain lending practices, including the adjustable rate mortgage, combined with our current market slump and high unemployment has contributed to the increased number of people losing their homes to foreclosure. Sadly, thousands more will face foreclosure in the next year. This has led to a great opportunity for the foreclosure rescue scammers. With an abundance of potential victims who are desperate for help, there are plenty of clients. They are easy to find because the notice of default is public record.
Popular Foreclosure Scams
One particular scam is known as the sale-leaseback scam. This one worked really well when homes were appreciating in value or if the homeowner had a lot of equity in the home. The scammer would agree to buy the home, pay off the mortgage and then lease it back to the homeowner until they can buy it back at a later date. They present the victim with a contract is very confusing and the homeowner doesn't realize how much their payments are going to increase over time, making it impossible for them to make their lease payments. The contract may contain very difficult buy-back terms, making it impossible for the occupants to regain ownership. The scammer's plan is to prey on the distressed homeowner's savings and their desire to keep their home. Once all of their financial resources have been exhausted, they are ultimately evicted from their home. By this time, it is too late for the homeowner to realize that the predator had no intentions of allowing them to buy back their home. They will market and sell the home for a profit.
Modifications have been made to the sale-leaseback scam so it works in today's declining market. The scammer promises to bring the mortgage payments current and to continue making payments while the homeowner pays an affordable amount of rent to remain in their home. Again, the contract is very confusing and "scammer-friendly" with hidden fees and terms that are impossible for the homeowner to meet. The scammer might show some good faith in bringing the payments current, but eventually, they will stop paying the mortgage, taxes and insurance, allowing the foreclosure to proceed, while they continue taking rent payments from the owners. Since they didnt formally assume responsibility for the mortgage payments, the homeowners who are paying rent are still obligated to pay the mortgage.
Big Fees for Little Service
Some foreclosure scammers will claim to be foreclosure consultants who work with lenders to modify the terms of a mortgage and stop the foreclosure process. They tell the homeowner to discontinue making payments and to forward them the mail they receive from the mortgage company so they can resolve the matter.
Sometimes, a scammer will collect a large fee upfront and perform some service, like mortgage modification negotiation, which is something the average homeowner doesn't realize that they can do themselves.
In any case, the homeowner is under the impression that the scammer is providing a professional service and resolving the situation. By the time the homeowner realizes that he has been scammed, it's too late; the foreclosure process has moved forward and the redemption period is up.
Stealing Title to the Home
In some rescue scams the homeowner does not realize they are signing ownership of their home to the scammer. The scammer explains a program that sounds good to the desperate homeowner and he just signs on all the lines, as indicated by the scammer. Some scammers have the nerve to get a legitimate contract signed, and then later, they forge a deed and another set of documents, thus, stealing title to the home. By the time the homeowner realizes that they have been duped, the home has been sold to another party!
Avoid Falling Victim to Foreclosure Rescue Scams
It is important to know how to recognize a scammer. The scammer uses many methods to gain the trust of the distressed homeowner. Here are some examples:
They contact you by phone or mail; some approach you at work or at home.
They know what you need to hear and that is what they tell you, using words like "stop foreclosure now," "save your home," "instant debt-relief," and so on.
They offer guarantees and customer testimonials
They gain your trust as they claim to have something in common with you; ethnic background, senior citizens, religious beliefs, schools they attended, etc
They charge a large, up-front fee
They ask you to sign a Quit-Claim Deed, giving up ownership of your home
They tell you to cease all contact with your lender and pass on mail or phone messages to them to handle.
Legitimate foreclosure consultants rarely approach you; they advertise like any other business and you must approach them for help. There are no guarantees of a lender's cooperation and anyone can make up customer testimonials. It is easy to find out church you attend, what language you speak, the clubs you belong to, etc...then pretend to have this in common with you. A foreclosure specialist will never tell you to stop communicating with your lender; this is the biggest mistake one can make and he certainly is not interested in your ownership interest.
Take Action to Help Yourself
Now that you know how to spot a foreclosure scammer, you can take the necessary steps to protect yourself.
Communicate with your lender. Contact your lender right away if you anticipate financial problems. You might qualify for a special refinance program or you can ask for a mortgage modification or enter into a forbearance agreement. See if your mortgage company offers any programs which you may not even be aware of.
Get help from a legitimate foreclosure consultant who can explain the foreclosure process and tell you how to proceed. Learn all you can about the foreclosure laws in your state; understand the deadlines and respond to all documents you receive from your lender. Know where you're at in the foreclosure time-line and when you are going to lose title to your home.
Check with the state to learn about the guidelines that a foreclosure consultant must follow. Some states require a consultant to give you a certain time period to cancel a contract or agreement that you enter with them. Find out what agencies you need to check with to determine the credibility and honesty of a foreclosure consultant. The internet is a great source for information; Google search the consultant you're considering doing business with. If there have been complaints, you're sure to find a press release or other documented information.
Never make a verbal agreement, get everything in writing, and be sure to read and understand everything clearly before signing any document. Do not sign any document that is blank or not completely filled out. Do not work with the consultant who asks you to sign a deed, giving them ownership of your home. This is one of the biggest red flags there is indicating one is a foreclosure rescue scammer.
This article was written by David Smith (734-756-6050) of U-Move-On, a company who helps people find the best solution to their foreclosure problem. They provide the resources and services for help with the entire foreclosure process, credit restoration, finding another nice home, moving expenses, legal help and more. Dave enjoys using the many skills he has learned during his career to help people in foreclosure Move On with their lives in the best possible way.