[Moe Bedard]

OCC Consumer Tips for Avoiding Foreclosure Rescue Scams

Foreclosures are increasing nationwide, and so are scams that promise to “rescue” homeowners from foreclosure. What these scams do is take your money, ruin your credit record, and wipe out any equity you have in your home.


Foreclosure con artists take advantage of people who have fallen behind on their mortgages and face foreclosure. Con artists know that people in these situations are vulnerable and likely to be desperate. Potential victims are easy to find: mortgage lenders publish notices before foreclosing on homes. After reading such notices, con artists approach their targets in person, by mail, over the telephone, or by e-mail. They advertise their services on Web sites or publications. They often refer to themselves with titles that sound official, such as “foreclosure consultant” or “mortgage consultant,” and market themselves as a “foreclosure service” or “foreclosure rescue agency.”


Your mortgage lender – or any legitimate financial counselor – can help you find real options to avoid foreclosure. If someone offers to negotiate with your lender and offers to arrange to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation, and experience. To protect yourself, follow the recommendations contained in this Consumer Advisory.


WATCH OUT FOR FORECLOSURE RESCUE SCAMS

Lease-Back or Repurchase Scams –
Be very suspicious if someone offers to pay your mortgage and rent your home back to you. This scheme often involves signing the deed to your home over to the con artist. The con artist may promise to sell your home back to you, but this may be very difficult, if not impossible, under the terms of the contract.
Signing over the deed gives the con artist the power to evict you, raise your rent, sell the house, or steal the equity you have in your home. You will still be responsible for your mortgage, so if the con artist stops paying it, your lender would have the right to foreclose on your home, and the foreclosure and any other problems would go on your credit record.

Refinance Fraud –
Look out for people posing as mortgage brokers or lenders and offering to refinance your loan so you can afford the payments. Con artists may trick you into signing over the ownership of your home by saying that you are signing documents for a new loan.
Signing over the deed to your home exposes you to the dangers described above. Even if you are a victim of fraud, you could still lose your home.

Bankruptcy Schemes –
Several scams attempt to abuse the bankruptcy laws. For example, a con artist may ask you to give a partial interest in your home to one or more persons. Each holder of a partial interest can then file bankruptcy, one after another. The bankruptcy court will issue a “stay” order each time to stop foreclosure temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. In another kind of scam, a con artist may offer to obtain refinancing or negotiate a payment plan with your lender. If you may make payments to the con artist, he or she may keep the money rather than pay the lender on your behalf. The con artist may even file a bankruptcy case in your name, without your knowledge, as a part of the scam.
Bankruptcy laws provide important protections to consumers. Scams can only temporarily delay foreclosure, and they may keep you from using bankruptcy laws legitimately to address your financial problems. Signing over ownership of your home, or even partial ownership, can result in serious financial harm.