Foreclosure Scams: Don't Let Pseudo-Rescuers Rip You Off
By Sharon Secor,
il-odm.org Staff Writer
With all the recent news about the increase of foreclosures, it should come as no surprise that many regions are noticing an increase in foreclosure scams. Some of the scams are designed specifically to take advantage of those that are inexperienced, which is a classification that many fall into, as their home is the biggest purchase they ever make. Others are framed in ways that appeal to those that are desperate to keep their homes, taking advantage of the psychological and emotional vulnerabilities that arise during such a stressful situation. Others can mirror legitimate foreclosure assistance plans, making these illegitimate foreclosure rescue plans hard to separate from those that really will provide help, instead of scamming consumers out of the home they want so badly to keep.
Could It Be A Foreclosure Scam? Watch For These Warning Signs
If you are solicited by someone seeking to rescue you from foreclosure, be very careful. Often, scammers pick up information from public sources, such as foreclosure announcements, or by gaining information from realtors and others by claiming to be interested in buying properties in foreclosure. Then, they contact those people and offer their so-called foreclosure relief services or assistance. Aggressive advertising, such as on the radio or late-night television and by e-mail, fliers, and going door-to-door, is another cue. There are enough foreclosures happening that no legitimate assistance provider needs to be out trying to round up business.
Advance fees – this cannot be emphasized enough – are a warning sign that should be heeded. Legitimate foreclosure assistance providers generally take their fees out after they have negotiated settlements. In other words, the consumer has already seem results and the situation is well on the way to being resolved. Scammers, however, often request fees upfront, before doing anything other than make lofty promises that all to frequently sound too good to be true because they are.
Pay close attention to who the person or company says they are, to the titles they attach to themselves, and what they say they do. If they claim to be mortgage consultants providing foreclosure services, be careful, as these a loosely phrased and they may not fall under licensing requirements and may not be held to industry standards, as they are not really a part of the official mortgage and lending industries.
Pseudo-rescuers often require the consumer to stop communicating with lenders, and others that may interfere with the scammer's plans by offering real help, such as a credit counselor. They tell the consumer to leave all negotiations and details to them, and often, worried consumers do, because, after all, they are the professionals and the consumer trusts them.
At this point, comes the big score for many scammers, those that are not content to just take the advance fees and disappear. In some cases, the negotiate a loan for higher than the debt remaining on the home, and pocket what's left after the mortgage, leaving the homeowner with a higher debt load and no equity in the home. In other cases, they broker arrangements to take possession of the home, renting or leasing it to the homeowner, and then selling it out from under them or evicting them and then selling it. Another tactic is to arrange a similar deal with another buyer and accept a kickback as their profit. Sometimes, a desperate homeowner, overwhelmed with relief at being able to stay in their home, never realized that they've signed it away. Other types of arrangements can be buying the house and then selling it back to the original homeowner at a much higher price, typically one with hidden fees and such that cost the homeowner even more, making a large profit.
With the recent efforts of federal and local governments, as well as by consumer advocate groups throughout the nation, there are plenty of legitimate means of helping a consumer manage a foreclosure situation. With the increase of foreclosures and the potential affects of all those defaulted loans on the lending industry and homes flooding the market on the real estate industries, lenders are more inclined than ever to help homeowners work through difficulties and keep their homes. Taking prompt action in the face of foreclosure is important, but that quick action should not be at the expense of good research and a clear understanding of procedures. If you see warning signs, don't hesitate to check with state and local officials, as well as with legitimate credit or foreclosure counselors, who can help you to evaluate a plan or steer you towards the real foreclosure help that you need.
More information available at:
- Advice from the FTC
- Hope Now: Support and Guidance For Homeowners