Foreclosure rescue scams have been spreading across the nation for the past couple years at an alarming rate. For the average homeowner it is crucial watch out for these scams so you can protect yourself and your home.
If you have fallen behind on your monthly mortgage payments be aware that scam artists can easily find out about this information. Many times they are knowledgeable brokers who know that homeowners who are struggling to pay their mortgage are vulnerable and often times very desperate. Potential victims to these scams are easy to locate because mortgage lenders publish public notices before foreclosing on a property. These con artists will usually compile a list of properties in foreclosure and contact these homeowners who they feel are in distress. They will contact borrower by telephone, mail, and sometimes even email, generally calling themselves “foreclosure consultants” or “mortgage consultants.” Just like a predator in search of its prey, they advertise themselves almost like a mortgage “God” promising they will prevent foreclosure as they lure you into their trap.
Do not let yourself fall prey to these devious predators. In this article we will explain common types of loan modification and foreclosure rescue scams to watch out for. Remember there are some legitimate companies out there but you must be very careful when deciding who to go with and whether or not you actually need this assistance.
-Rent-to-buy/Leaseback mortgage schemes- In a leaseback or rent-to-buy scheme the borrower is to transfer the title of their property to the con artist in hopes of securing better financing, or to enable the borrower to remain in the home as a renter until they are able to buy it back. If the borrower does not comply with the terms of the agreement they can easily lose money and also face eviction. The terms of this agreement are typically designed to be unmanageable. For example, many times the new terms will come with a very high down payment and/or monthly payments the borrower cannot afford. These scammers intentionally do this because in reality all they really want is your home and your money.
It is important to note that transferring the title of your property does not mean you are no longer obligated to the mortgage debt. The only difference now is the borrower no longer owns the home. If monthly payments are not made on the property the lender has the right to pursue foreclosure and this will put a major dent in your credit rating.
-Foreclosure prevention and refinance schemes- These con-artist offer to be the “middle man” between you and your mortgage servicer to help negotiate a loan modification, repayment plan, or other common types of loan workouts. Often times will even guarantee they can prevent foreclosure and achieve an affordable solution for their clients.
Some of these scammers will even request that the borrower makes their monthly directly to them so they can pass it to the lender. However, in reality some will actually pocket your mortgage payments and let your property go to foreclosure. Other times they will tell their clients to stop making their mortgage payments or to stop all communications with their servicer. Be very careful if you are deciding to hire a loan modification firm because some do a great job convincing people they can accomplish something that is extremely rare, like a principal reduction for example. These guys are famous for promising they can bring your balance down to today’s current prices. That is an obvious sign they may be a scam, nothing is guaranteed when it comes to loan modifications.
Remember to always first contact your lender to see what options are available for your situation and take the time to completely understand what you are trying to accomplish. Here at LoanSafe.org we have a forum that now has a community of over 30,000 homeowners and professionals alike, so we encourage anyone who is struggling to pay their mortgage to give us a visit and learn how to get back on track.
-Affiliated with government modification programs. Some of these firms will actually claim they are affiliated , or approved by, the gov or may require a large down payment to qualify for government sponsored loan modification programs. Keep in mind that while the loan modification programs provided by the government are legit, a lot of these crooks are not. The government’s modification programs do not require an upfront fee and you can apply for these programs yourself. All you need to do is contact your lender to get an application .
Many times the scam artist company or website will sound very familiar to a government agency to make it appear they are legitimate. Terms may be used such as “MHA,” TARP,” “Federal,” or other acronyms or words that have to do with government sponsored modification programs. This strategy is designed to trick the homeowner into believing the scammer is indeed affiliated with the government. They have taken action against many of these criminals but you must do what you can to save yourself from getting ripped off and possibly losing your home. So be very wary and research anyone who claims they are approved or affiliated by the federal government.
These are just a few of the most common foreclosure prevention and loan modification scams out there today. Remember it is possible to achieve assistance for your mortgage on your own. If you feel you have been a victim to one of these unscrupulous firms and would like to make a complaint, check out the websites listed below:
For CA homeowners: http://ag.ca.gov/loanmod/
Find your state’s Attorney General here: http://www.naag.org/current-attorneys-general.php