Mortgage Foreclosure Rescue Scams

Foreclosure rescue fraud is sweeping the country and can end up costing you the home you're desperately trying to keep.

• Phantom help - In this scam, the supposed rescuer charges very high fees for basic phone calls and paperwork that the homeowner could have done. Or, the rescuer will make promise to represent the homeowner but will not follow through. This is really a too little too late scam as in the helpless homeowner receives too little (or no) help too late to stop the foreclosure from taking place.
  
  
• Bailout - Here the scammer bails the homeowner out by helping them get rid of the house. The way the scammers get the house varies, but each method ends with the homeowner surrendering the title to the house on the promise that they can stay on as renters and buy the house back once things have been "fixed." In the end, of course, the homeowner can't buy the house back and the supposed rescuers get most, if not all, of the equity.
  
  
• Bait and switch - This is much worse than the bait and switch routines executed by unethical car dealers. At least with those scams you still get a car. The only issue there is that, you just get to spend more money for a different car than you wanted. The bait and switch with foreclosure scams involves signing away the ownership of your home.
  
  The scammers will tell the victim that they are signing documents for a new loan that will solve their problems. In reality, they are signing forged documents that will give the crooks ownership of the home. To make matters worse, the victim will still owe for the mortgage but will no longer have the asset.

• A rescuer finds homeowners in need of "help" through local public-foreclosure notices. Believe it or not, there are actually companies that specialize in compiling and selling such lists.
  
  
• The rescuer advertises their service by dropping a card or flier on the victim's doorstep or calls to offer their service. The rescuers have also taken to posting ads in public places. Ignore posters, fliers and especially handwritten notes offering help for your foreclosure.
  
  
• A meeting is set up. At the meeting, the rescuer builds up the victim's hope and promises a fresh start. There are also empty promises made such as that they will sell the house back to the victim at some point. What typically happens is the rescuer sets the rental price at a level that the victim cannot afford, then they move to evict them for failure to pay the rent. What's even worse is that all it took for the rescuer to buy the property was to payoff the delinquency.
  
  
• The rescuer will recommend that you break off contact with the lender and any counselor that you may have been working with. This is the exact opposite of what you should be doing. If you are in a foreclosure, you need to be in contact with your lender to find out what you can do to fix the problem.
  
  
• The rescuer will do very little to help leading up to the actual foreclosure. They might make a phone call or have their prey sign some innocuous paperwork to make it look like they are really trying to help. Then, when it is too late to stop the foreclosure, the property is either taken when the scam is completed or sold to someone else at foreclosure. If the latter event happens, there is little if any equity left due to the rescuer's fees.
  
  
• Homeowners who thought they had a deal to continue as renters can now be evicted from the very house that they owned. Even worse, because the mortgage was not paid off, the victims are without a place to live and owe the mortgage!

• The use of lies, exaggeration, misinformation and pressure.
  
  
• Blind trust in someone that the victim's think really want to help them.
  
  
• Fraud, deception and forgery.
  
  
• The desperation of the victim who feels his or her dream slipping away.
  
  
• Affinity fraud. These scams are often perpetrated by people of similar ethnic, racial, religious or age groups. The crooks understand that people who are like you are more likely to be on your side.
  
  
• The homeowner's often lack in education or financial sophistication.

• Do not bury your head in the sand. The problem will not go away, and will only get worse if you ignore it.
  
  
• Do make sure that you are in foreclosure. If you are behind in payments, you will receive what is called a deficiency notice. These letters notify you of your delinquency and give you a chance to resolve the debt. If you receive a Notice of Trustee's Sale, or similar document, you are in foreclosure.
  
  
• Do speak with your lender. Try to work with your lender to restructure the payments or refinance the loan.
  
  
• Do learn the laws regarding foreclosure for your state. It is important to know how much time you have to resolve the issue.
  
  
• Do contact a counseling agency. This is often too big of an issue for a person to handle on his or her own. Make sure that the counselor is certified by the Department of Housing and Urban Development (HUD). Their website is www.hud.gov.
  
  Be careful when choosing a counselor and pay attention to the certification requirement recommended above. Some counselors are scammers in their own right and will overcharge for services that they not even provide. It's really very easy to tell a scammer from a legitimate counselor: You should not have to pay for legitimate housing counseling.
• Do contact an attorney. You can find one through the National Association of Consumer Advocates ( www.naca.net ). Remember, you get what you pay for so you may be better off searching locally for a consumer protection attorney.
  
  
• Do not sign a contract under duress. Always request to take time to review any documents on your own and at your own pace.
  
  
• Do not enter into oral agreements. Get in any offers in writing and tell whoever is making the offer that you and/or your representative will review any and all offers.
  
  
• Do not make payments to any party other than the lender.
  
  
• Do not sign a home-sale contract where you are not released from your existing mortgage.
  
  
• Do not sign a quit claim deed without being specifically instructed by your attorney or representative to do so. Do not agree to any deal that allows you to rent the property and then buy it back at a later date.
  
  
• Do not accept an offer from somebody who wants to make good on your missed payments and take the house off your hands in exchange for documents that assign them the surplus from the foreclosure sale. Think about it, if you owe $200,00 on your mortgage, plus arrears of $10,000, and your house is worth $250,000, you stand to make money on the sale.
  
  
• Do sell your home but only if there are no other options. It is not always possible to resolve delinquent mortgage payments. Selling a home and receiving the equity is much preferred to having your home stolen by thieves.