Friday, June 11, 2010

Don't Become a Foreclosure Scam Victim!

Unfortunately there are always people out there who are ready to take advantage of someone in a bad situation. During these tough financial times there are even more opportunities for people to fall victim. Companies claiming to help people avoid foreclosure actually get people to sign over their home. These home rescue scams are increasingly on the rise. Homeowners that are struggling to pay their mortgage or are anxious to sell their homes are often victims.

There is help available for dealing with foreclosure and other financial problems. Always try to work with the original lender or a reputable organization. Avoid taking help from an unsolicited source with out doing research to make sure they are legitimate.

The best way to avoid mortgage fraud is to recognize and understand the signs.
Be suspicious if a company or person:
  • Offers to rent your house to you so you can buy it back over time
  • Charges an up-front fee before providing any services
  • Offers to fill out paperwork for you or uses forms that contain blank spaces "to be filled in later"
  • Wants you to transfer the deed to your house
  • Pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.
  • Encourages you to borrow more than the value of your home
Some common scams that homeowners fall victim to are:

Rent your own home scam:
In this scam the rip-off artist offers a solution that will allow the homeowner to remain living in their home. The homeowner will be required to surrender the title to their house but they will be able to stay there as a renter. Often times there will be a promise of very low rent with the commitment of selling the house back to the original homeowner in the future. The rent is usually set at an amount that the homeowner can’t afford and they are then evicted from their home. In the end, the homeowner loses the house and any equity that may have existed is gone.

Help with a price:
In this case the “rescuer” offers his services to help the homeowner avoid foreclosure. For a large upfront fee the scammer offers to represent the homeowner to the lender and handle the financial arrangements. Unfortunately the scammer doesn’t follow through but they do pocket the money.
The NEW loan scam:
In this scam, the homeowner is offered a new loan that is supposed to solve all of their financial problems. When the homeowner signs the documents for this NEW loan they are actually giving ownership of the home to the rip-off artist. In the end, the homeowner still owes for the mortgage but they no longer own their home.
When it comes to your home and any finances always be careful and cautious.
Like the old saying goes…If it seems too good to be true, it probably is.

Additional information and help:
HUD - Foreclosure Avoidance Counseling
The Federal Reserve Board - 5 Tips for Avoiding Foreclosure Scams
The Federal Trade Commission - Foreclosure Rescue Scams