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.

When it comes to foreclosures there are a couple of things that might happen depending on the laws of your state.  In some states, the whole process must go through the court – this is called Judicial foreclosure.  In many states, however, there is another process – non-judicial foreclosure by which the court does not need to be involved.

In a non-judicial foreclosure  the homeowner is mailed a letter of default after he has missed a certain amount of payments.  The homeowner is given a certain amount of time to bring the mortgage current.  This could be one month or even six months depending on the laws of the state.  If they fail to do so the bank will issue a Notice Of Sale which is mailed to the homeowner, published in the legal section of the paper in certain public places and also recorded at the county level.

The notice of sale will state the specifics of the property, sometimes along with a picture, and the date of the sale which is held an auction format.  This usually goes up on public notice weeks before the actual sale and the homeowner can actually bring the mortgage current up until a few days before the sale.  If he does this, then the auction is canceled and the homeowner gets to remain in the house.

Anyone is allowed to come to the auction and you’ll typically see real estate investors who specialize in buying foreclosures at these types of sales.  Unlike a regular real estate sale, you usually I’m allowed to view the inside of the home just what you can see from the outside although the rules may be different in different states for this.

Come the day the auction, the bidding is held right there in the open and the property is sold to the highest bidder barring any reserve from the lender.  The high bidder usually has to have a significant deposit that he hands over right after the auction and must come up with the remainder of the funds in a short period of time.

If you having trouble paying a mortgage and think that your house may be foreclosed upon is important to learn all the laws of foreclosure in your state and the ins and outs of both judicial and non-judicial foreclosure so that you know what you are facing.  Being prepared for this tough time will help you come through it a little bit easier.

While many people don’t realize it, negotiating with your back when you are facing a foreclosure is an option you might consider.  Well the bank can be rather unyielding at times, it’s important to remember that what they really want is their money for the long and if you can offer them a good plan whereby you will pay them back than they might just listen and you may be able to avoid foreclosure and still keep your home.

Having said that, you actually do have to have a good plan.  It’s not realistic to expect the bank to simply let you go without paying or to lower your mortgage substantially.  However, if you’ve had a financial setback but are now on the road to recovery you can bring your proof to the bank and they may take this into consideration and maybe even change your loan so that a benefit your current situation while still allowing them to get all their money.

One thing about a bank, though, is that they are kind of one-sided and they can be a little sneaky.  They then want make you think that they are the only game in town and what they have on the table is the best offer.  Therefore, you go to one of the research so that you can know what you’re talking about and also if what they are often really is the best deal.

When negotiating with your Mac, it’s best to lay all your cards on the table.  Tell them about your financial difficulties and bring any supporting documents as to your finances in the future.  For example, if you’ve been out of work for some time and are having trouble making your mortgage payments but are starting a new job in the next several weeks, you obviously have a powerful bargaining chip with your new employment.  See if you can get them to work something out where they either forgive a  payment or help you out by giving you a small loan to get you through the next couple of payment that you can then pay off when you start getting your new paychecks.

One thing you want to remember is that loans and banking is a very complicated business and if you don’t have a lot of experience you might be better off to hire professional.  You can find a financial advisor or mortgage broker that will help you negotiate with the bank.  Of course, they won’t do this for free but this could be money well spent because these people know all the ins and outs of mortgages and they have many contacts at different banks so they’ll be able to find things for you that will help give you the edge on your mortgage.  Also, since they know the laws around this issue they may be able to provide invaluable advice that can help you in this tough time.

In the world of foreclosures there are actually two types, judicial foreclosures and non-judicial foreclosures.  Interestingly enough, each state in the US handles foreclosures differently having different rules and different time frames for each process.  However, each of them have some type of judicial foreclosure which is explained in general terms below.

The big difference between judicial and non-judicial foreclosures is that the judicial foreclosure goes through  the courts.  It starts with the lender filing a notice of Lis Pendens along with a complaint.  The complaint holds all the information about your impending foreclosure.  In it is stated the debt owed and the intention of the lender to seize the property is security for the debt.

In effect, the lender is stating to the court that they loaned you money for the property and you agreed to pay a certain amount each month to repay the loan.  Once you become arrears in those payments the lender will start this process.  The number of months can vary depending on what state the property is in.

The homeowner will be served notice of this complaint.  Typically it is mailed to you and sometimes it as sent is a certified letter.  Depending on the laws of the state, however, it may only be published in the newspaper.

As a homeowner, you will have your day in court with a judge who will hear both sides of the story.  It will then be decided whether the debt is valid or not.  If it is there will most likely be a judgment for the total amount you owe in addition to the cost of the foreclosure proceedings. Once his judgment is recorded, the court will issue a writ that authorizes the sale of the property in what is called a sheriff’s sale.

The sheriff’s sale is just a fancy term for an open auction.  Typically, the property will be advertised in the paper with the date of the auction publicly stated.  At this point, anyone can go on the auction day and bid on the property.  In some places, this auction might be held on the courthouse steps but in most states is held right on the property itself.

If someone wants to bid on the property, they usually have to have a certain amount of cash as a down payment and then be able to provide the rest of the money within a reasonable amount of time – usually about 30 days.  Once again, each state is different and this might not be the case everywhere.

Once the court has confirmed the sale, a sheriff’s deed will be prepared for the highest bidder who is now the new owner of the property.  While you might think that this gets you out of your debt to the bank, it usually does not.  You may still owe the difference between the amount the house sold for and the amount you owe if the owed amount is greater.

There are certain cases when getting help from professional is the smartest thing to do and foreclosure is one of them.  Of course, it might be hard to think about spending  the money for a professional especially if you are having trouble financially, however, in the long run it will be money well spent and may even actually save you money.

The foreclosure process is very complicated and there are many rules and regulations surrounding it.  If you don’t know these rules and you try to represent yourself you can end up getting yourself into more trouble.  Sometimes hiring a real estate lawyer to help you get the most out of your foreclosure is a smart move.

Real estate lawyers know all the real estate laws in your state.  They can make sure that you are getting a fair deal as well as counsel you all in the solutions that are available to you.  They may be able to help you protect your property from being foreclosed on as well as negotiate a deal with the bank that will satisfy both your needs.  In addition, if you sell the property they can help you with all the legalities of selling to make sure that you don’t get yourself into trouble.

With all the foreclosures happening today, foreclosure consultants have become quite popular.  These people specialize in foreclosures and know all the ways that you can try to avoid a foreclosure in order to keep your home.  They can help stop the process as well as assist in exercising your right of reinstatement.  In some cases they’ll negotiate with the lender to extend the deadline to give you more time to bring the loan current.

In some cases a foreclosure consultants can help get you some temporary funds to stall out the foreclosure process.  This is particularly helpful if you know that money will be coming soon down the road.  Of course, it’s not so helpful if you have no money coming in your future because now you will have not only the mortgage but this other loan to repay.

Real estate lawyers and foreclosure consultants work with the banks every single day so they have a lot of contacts and they know all the things to try that might benefit you.  In the long run hiring a professional could be the difference between saving your home and losing it to foreclosure.