- Posted by Jeremy Bachmann
You're struggling with your mortgage payment and worried about a possible foreclosure. At your most vulnerable position, you are a target for a range of foreclosure scam artists.
Promising to save your home and help pay your mortgage, crooks lure in desperate homeowners. Under the guise of support, these scammers somehow manage to cheat consumers out of their money and sometimes even their homes.
The damage of these foreclosure rescue scams can be serious. So, it's important that you understand the warning signs of these frauds, so you can avoid becoming a victim of a foreclosure rescue scam.
How Do the Foreclosure Scammers Find Me?
Most state laws require lenders to publish foreclosure notices in the local courthouse's "newspaper of record." Once the foreclosure is filed, this information becomes available to the public via print and online. As a result, anyone can search for your foreclosure status at any time.
Setting the Trap
Once the foreclosure scam artists have picked their victim, they'll attempt to contact the homeowner via phone, mail, or personal visits. Some crooks even publicize their faulty services through commercials on TV, online ads, promos on the radio, posters on telephone poles or flyers in the mail. The fraudsters' message is the same – you give us money, and we'll help you stay in your home, get a "fresh start," improve your credit rating, or receive instant cash. Some common phrases the foreclosure scammers used include:
- "Stop foreclosure now!"
- "We have special relationships with banks that can speed up your approval process."
- "100% money back guaranteed."
- "Keep your home. We know your home is scheduled to be sold. No problem!"
Identifying Foreclosure Rescue Scams:
Foreclosure rescue scams come in a variety of schemes. And, all are geared towards desperate homeowners, facing foreclosure or in financial distress. The most common traps include:
In this scenario, the foreclosure scam artist poses as a counselor. He will claim that he can negotiate a deal with your lender to modify your loan and save your home. But, you must pay him a fee first! And, these so-called "processing fees" or "administrative fees" can cost anywhere between $5,000 and $10,000.
The scammer will also attempt to seal you off from any legitimate legal and financial help. In fact, many crooks will demand that you stop contacting your lender, lawyer or housing counselor, since he will be "handling" all negotiations. He may even insist that you begin sending your mortgage payments to him, rather than your lender.
Then, sadly, once you've paid him the fee and a few mortgage payments, the scammer will disappear, along with all of your money.
The Bait and Switch
Here, the scammer will present the victim with a stack of papers and will tell homeowner that they are signing documents for a new loan. But, in reality, you will be signing forged documents that will give the fraudster the deed to your home. Now that the crook owns your home, he can and will evict you. And, the worst part – even if you're kicked out of your home, you will still be responsible for paying the mortgage off!
Lease and Buy Back
For this trap, the crook will offer you the option of either transferring the title or selling your home to a supposed "third party investor." The scam artist will claim that he will allow you to lease the home from him, until you get back on your financial feet again. And, once you gain control of your finances, you are told that you can get the deed to your home back.
However, these scammers often neglect to tell victims that one late check will get them evicted. So, crooks draw up lease agreements that hike up your monthly payments. As a result, people fall short on money and become unable to pay their lease. And, since you no longer own your home, the scammer can kick you out without a moment's notice. Now you're left with less money, no home, and no equity.
So, What Companies Can Help Me?
Companies that are legitimate will always sit down with distressed homeowners to find a solution, free. The first place to turn if you're struggling is your lender - and as early as possible. Your lender is the one who's truly empowered to help you and will be most aware of what programs you're eligible for. Early intervention with your lender can keep a bad situation from getting worse.
If you're struggling with your PennyMac mortgage, for example, call us at (866) 545-9070 as soon as possible. A PennyMac Home Loan Specialist will listen to the circumstances that have you behind on your payments, and discuss options to help you decide the best solution, including affordable repayment and forebearance plans to help you get back on your feet or loan modification plans that lower payments and help you keep your home.
Understandably, if you'd like outside assistance to help you work with your lender, the federal government provides many free resources to help you avoid or navigate through the foreclosure process. Homeowners can always call the Homeowner's HOPE™ Hotline at 1-888-995-HOPE (4673) to speak to a housing counselor.
These housing counselors will talk to you about your current situation and work with you and your lender to help you decide what course of action is best for you. In addition, all promises and agreements will be in writing, so you won't have to solely rely on someone's word. Most importantly, these government-sponsored resources will not object or prohibit you from consulting with a lawyer, credit or housing counselor, family member, friend or other expert resource.
Remember, if you work with quickly with your lender and a housing counselor, the odds are better that you will avoid foreclosure!
Some Rules of Thumb:
So remember, before you sign that seemingly too-good-to-be-true offer, ALWAYS contact your lender, a housing counselor, or both. These people are here to help you and guide you, free of charge.
To help guard you against foreclosure rescue scams, here a few HUD-approved tips to follow:
- Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
- Beware of people who pressure you to sign papers immediately, or who try to convince you that they can "save" your home if you sign or transfer over the deed to your house.
- Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
- Never make a mortgage payment to anyone other than your mortgage company without their approval.