Don't Lose Your Home to Foreclosure "Rescue" Scammers.
Foreclosure "rescue" scammers steal your home, equity, and money. Here's how to protect yourself.
As record numbers of homeowners are defaulting on mortgages and are at risk of foreclosure, foreclosure "rescue" scammers are coming out of the woodwork in droves. These people and companies pretend to help homeowners facing foreclosure, but instead steal homes, equity, and money -- leaving the former homeowner in a more desperate financial state than before.
Don't become the latest victim of these scams.
More Foreclosures Bring More "Rescue" Scams
Due to the current credit crunch and lending practices by banks, more people are having trouble paying their mortgage. With the housing market in a slump, it's harder for homeowners in financial distress to sell their home (the sale price often doesn't cover the mortgage) or refinance with better terms. The result is a dramatic increase in the number foreclosures.
Here come the Foreclosure Scammers:
The methods scammers use to rip off homeowners are extremely varied. But most of them fit into three broad categories.
1. Sale-Leaseback Scams
In these schemes, foreclosure scammers prey upon the overarching desire of many homeowners -- to stay in their home. The foreclosure scammer tells the victim that the scammer will buy the house so that the mortgage is up to date and the homeowner can rent the home indefinitely and then buy the home back from the scammer. Unfortunately, the rent payments and buyback provisions are usually so onerous that homeowners can never buy the home back.
2. Charging High Fees for Little or No Services
Some foreclosure scammers pretend they are legitimate foreclosure consultants and then exploit the homeowner's trust by:
- charging exorbitant fees for services the homeowner could easily have performed himself.
- charging fees for services they never perform, or taking steps that hurt the homeowner.
These schemes cause the homeowner to lose much-needed money. Worse, because the homeowner believes the foreclosure "consultant" is handling the situation, the homeowner does nothing during the crucial time period when action must be taken. By the time the homeowner realizes he has been scammed, it is too late to get current on the loan, negotiate with the lender, sell the house, or find effective assistance.
Also, under Nevada law a foreclosure “consultant” can not take money up front.
NRS 645F.400 Foreclosure consultants: Prohibited acts. A foreclosure consultant shall not:
1. Claim, demand, charge, collect or receive any compensation until after the foreclosure consultant has fully performed each covered service that he contracted to perform or represented he would perform.
3. Stealing the Home Without the Homeowner's Knowledge
In these schemes, the foreclosure scammer gets the homeowner to unwittingly surrender ownership of the home. Often, the foreclosure consultant promises that he will bring the mortgage up to date and allow the homeowner to stay in the home, setting up a payment plan for the homeowner to pay him back. The victim doesn't realize that the home has actually been sold to the scammer (usually at a ridiculously low price) and ends up paying extremely high rent to stay in the home.
Sometimes, the homeowner believes she is merely signing new loan documents to bring the mortgage current, but instead is signing title over to the scammer. Or the scammer may simply forge the homeowners' signature on documents.
What to Look For:
The people and companies that prey upon homeowners in foreclosure use many tactics to gain the homeowner's trust. Here are some examples:
The scammer contacts you by telephone, mail, or even knocks on your door (legitimate companies don't seek you out, you must go to them).
The scammer is smooth-talking and preys upon your desperation.
He provides little or no information about the foreclosure process.
Many scammers claim government affiliation.
They often use "affinity marketing" -- Spanish-speakers marketing to Spanish-speakers, Christians to Christians, senior citizens to senior citizens, and so on.
They claim the process will be quick and easy (dealing with foreclosure is never quick and easy) and use messages such as: "Stop foreclosure with just one phone call" or "I'd like to $ buy $ your house" or "Do you need instant debt relief and CASH?"
They tell the homeowner to cease all contact with the mortgage lender.
