Foreclosure scams are flourishing in this time of rising mortgage rates, with desperate homeowners being lured by offers of help, only to be cheated out of the equity they’ve built up in their home, or tricked into transferring ownership of their home, or end up stuck paying expensive fees for little or no help.
Foreclosure scams are becoming increasingly common. Scammers often target homeowners struggling to meet their mortgage commitments or anxious to sell their homes.
The scammer or 'rescuer' identifies struggling homeowners through public foreclosure notices in newspapers or at government offices.
They will contact you by phone, postcard, flyer, advertising or even show up at your home. You will usually find that the initial contact is a simple message stating that they can help you keep your home.
If you decide to have a meeting with them, they will promise a fresh start. They will also ask you to stop talking to anyone but them as they will handle all the negotiations for you.
Variations of foreclosure scams have evolved over time, however, the end result is always the same The homeowner loses everything!
The homeowner may be forced out of the home and the scammer will move in tenants and collect rent until the home is foreclosed on, leaving the homeowner straddled with the debt. The scammer may also 'sell' the property to someone, victimizing both the buyer and homeowner.
People involved with foreclosure scams typically promise to help homeowners who are in financial straits but instead charge exorbitant fees for services with little or no value, strip equity out of victims’ homes, or take ownership of the homes outright.
See our page on Foreclosure Rescue Scams for more information on the way those scams work.
Three types of schemes are common:
Businesses that carry out these scams often refer to themselves as 'foreclosure consultants' or 'foreclosure rescue specialists.' They use high-pressure sales tactics and distribute cards or flyers with messages such as 'Stop foreclosure with just one phone call,' or 'I’d like to buy your house.'
There is help available when facing financial problems or foreclosure, but
make sure you are dealing with a reputable organization before getting
involved.
If you've received a foreclosure notice, contrary to what the scammers would
have you believe, contact your mortgage company first. There are many
remedies available, including renegotiating the terms of your mortgage, that
can save your home or failing that, allow you to walk away with most of your
equity.
If you can't refinance, renegotiate or sell quickly, it may make sense to
look at filing for bankruptcy.
Most people fear or loathe bankruptcy, and understandably, however it may be a more reasonable option instead of carrying on and maintaining a debt that you may still be obligated to pay.
It is important to talk to a attorney or legal aid organization, since your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to the Legal Services Corporation, a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
Homeowners in danger of foreclosure should work with their lenders to avoid foreclosure, consult a counselor approved by the U.S. Department of Housing and Urban Development www.hud.gov, or seek advice from a government-sanctioned program, such as HOPE NOW www.hopenow.com.
Check the website of the U.S. Department of Housing and Development [HUD] to locate a HUD approved counselors [they are listed by state].
Foreclosure prevention resources are available at the following web site:
Foreclosure Scams
prevention [HOPE NOW is an alliance of HUD-approved counseling agencies,
mortgage companies, investors and other mortgage market participants that
provides free foreclosure prevention assistance. The site also has a HOPE
hotline on 1-888-995-HOPE which is staffed by HUD-approved credit counselors
who can guide homeowners to foreclosure options.
Our best advice is,
DON’T SIGN ANYTHING
before having a licensed attorney review the paperwork.