Foreclosure Scams are on the rise

Unfortunately, the contracted economy means a rise in scams and a growing number of people who fall for them out of desperation. This can result in a victim losing money, having credit ruined and wipe out any equity you may have in your home.

Scam artists have no trouble finding potential victims – mortgage lenders publish notices before foreclosing. The con artists then use these publications to contact potential victims by phone, by mail or even in person or by e-mail. They advertise their “services” on the internet or in publications. Like any other con artist, they tailor themselves to be convincing, providing credentials and titles that are official-sounding.

Just remember: anyone can get business cards printed and they can put whatever they want on those cards.

The first place to get if you are getting behind on your mortgage is to your bank. They will not charge you to discuss modification of your loan or some sort of payment plan that will prevent foreclosure. Many banks are now in a position where loan modification is preferable to foreclosure, and this is what’s being encouraged by the federal government. You should only consider alternatives if you cannot reach an agreement with your current mortgage lender. Any legitimate financial counselor will also help you find options, if you have access to one. If someone offers to arrange to stop or delay foreclosure for a fee, carefully check their credentials, reputation and experience. Ask for and verify their certifications. When it comes to people you trust to advise you on financial matters, including your home, you should never sacrifice caution. If they have no certifications – or if they have lied about them – then break contact with them immediately.

Common Foreclosure Scams

• Lease-Back or Repurchase. Be very suspicious if someone offers to pay your mortgage and then rent your home back to you. This scheme involves signing the deed for your home over to someone else. They may promise to sell the home back to you at a future date, but this may be difficult to impossible, under the terms of the contract. This gives the con artist the power to evict you, raise your rent, sell the house – or anything else a legitimate owner has the right to do. In essence, you are selling your home to the con artist for the balance of the mortgage.
• Refinance Fraud. Be cautious of anyone offering to refinance your loan so you can afford the payments. Con artists may trick you into signing over the deed to your home, saying you are signing documents for the loan. As above, check credentials and affiliations!
• Bankruptcy schemes. Several scams attempt to abuse bankruptcy laws. One of these schemes involves selling “shares” in your home to one or more people. Each holder of the partial share can then file bankruptcy, one after the other. The bankruptcy court will then issue a “stay” order each time, to temporarily stop foreclosure. However, the stay order does not excuse you from making payments or repaying the full amount of the loan. In another kind of scam, the con artist may offer to obtain refinance or negotiate a payment with your lender. If you make payments to the con artist, he or she may keep the money without making payment to the lender on your behalf. They may even file bankruptcy in your name, without your knowledge, as part of the scam. Getting involved in one of these scams may cause you further harm by preventing you from using bankruptcy laws to legitimately address your own financial problems.

Protect yourself from scam artists

• Know what you are signing! Read and understand every document you sign. Ask questions and be wary of attempts to get you to sign without reading or questions that cannot be answered.
• Never sign documents that have blanks that can be filled in later.
• Never sign a document that contains errors or false statements.
• Get all promises in writing. Oral promises and agreements are not legally binding. Protect your rights by getting everything in writing and obtaining a countersignature from the other party or parties.
• Make your payments directly to your lender! Never trust anyone else to make your payment for you.
• Never sign over your deed to someone else. By signing over a deed, you lose all rights.
• Report suspicious activity to the FTC and local consumer protection agencies.
• If you feel the person you’re dealing with is not straightforward, doesn’t provide credentials when asked, can’t or won’t answer questions – don’t continue to conduct business with them!

Contact your lender as soon as you think you may be unable to make your mortgage payment. Lenders are often in the best position to help.