Foreclosure Scams
TweetThere are always predators out on the loose looking for easy prey. During times of crisis, unwary victims make themselves more vulnerable to fraudulent practices guised as legitimate solutions. The recent housing crisis increased the incidence of foreclosure scams. The foreclosure "specialist's" pitch may sound like an answer to your prayers, but most of the time their intentions are anything but honorable. Such scams include:
Foreclosure prevention counselors
Foreclosure prevention "specialists" pose as counselors who charge outrageous fees in exchange for making a few phone calls or completing some paperwork that the homeowner could easily do for himself. These tactics don't prevent foreclosure proceedings. Thinking they are on the path toward saving their home, homeowners stop seeking legitimate help. In addition, scammers now have access to the homeowner's personal financial information.
The lease/buy back
Homeowners are deceived into signing over the deed to their home to a scam artist under the premise that they can remain in the house as a renter and will eventually be able to buy it back. Usually, the terms of this ploy are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the "rescuer" walks off with most or all of the equity.
The bait-and-switch
Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don't know they've been scammed until they get an eviction notice.
Homeowners fall for these scams because they, one; don't understand the terms of foreclosure, including owners rights and time frames. Two; the homeowner is quickly trying to remedy their situation with the fewest possible consequences. In their haste, they neglect to do their homework. Three; homeowners are ashamed that they are in default and hesitate talking about it with those who could truly help. They take responsibility for themselves and try to resolve issues on their own. If your mortgage is in default, follow these tips from The National Consumer Law Center to avoid getting caught in a foreclosure scam.
- Don't panic and make any rash decisions. Get detailed information about the deadlines you face to find a resolution. Pay particular attention to the date on which you would lose legal right to ownership.
- Never sign a contract under pressure. Take your time and consult a lawyer if possible.
- Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
- Never make your mortgage payments to anyone other than your lender. If you can't pay, do not ignore warning letters from your lender; contact them instead.
- Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
- Don't sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
- If you do not speak English, never use a "rescuer's" translator. Instead, insist on using your own translator.
