In every disaster there are those who look for opportunities to take advantage
of the vulnerable. Foreclosure brings out scammers looking for opportunities.
When you are facing foreclosure and looking for help to avoid foreclosure,
you need to be careful. There are many out there just waiting to pounce
and take advantage of your misfortune. They advertise themselves as foreclosure
rescuers or experts. Before you can realize what's happening, they
will acquire your home for a fraction of what it would have brought at
sale. Sometimes they will transfer your title into a trust enabling them
to rent or resell your property to other unsuspecting buyer while you
remain legally bound to make the mortgage payments. The mortgage company
is unaware that anything is amiss and you are left on the hook to pay
the mortgage on a house you no longer own.
3 Categories of Foreclosure Rescue Scams
There are mainly three categories of foreclosure rescue scams.
The Phantom Help
In Phantom Help, the so called “rescuer” will charge outrageous
fees for light-duty phone calls or paperwork you can easily do yourself.
None of these phone calls or paperwork actually results in saving your
home. It just gives you a false sense of hope and prevents you from actually
seeking qualified help.
In the bailout scam, the rescuer deceives you into signing over the title
with the belief that you will be able to remain in the house as a renter
and eventually buy it back over time. The actual terms are so tedious
that the buy-back becomes impossible, you lose possession and the rescuer
walks off with most or all of the equity.
The Bait and Switch
In the bait-and-switch, under the guise of making you sign documents to
bring your mortgage current, the rescuers will make you surrender you
ownership. They will do this in such a way that you will not realize that
you have been scammed until you are evicted.
Ways to Identify Scammers
Scammers approach homeowners in many ways, including a straightforward
phone call, flyers and brochures being left of the door, and even a knock
on the door. Some of the scammers are well-organized and advertise in
the newspaper classified and on the web. Some even have their own websites.
When you are
facing foreclosure, you do not have much time. This can lead you to make hasty decisions
without consulting others. Scammers almost always highlight the lack of
time and insist that you make immediate decisions. They then pressurize
you and get a quick signature on the unread and fraudulent documents.
The initial contact typically revolves around a simple message and frequently
contains a "time is of the essence" theme, adding a note of
urgency to what is already a stressful and possibly desperate situation.
Once you fall for the trap and decide to move forward with the rescuer,
you will be promised a fresh start at the initial meetings, and they may
also provide you with testimonials of other homeowners who they claim
to have rescued. They will then instruct you to cease all contact with
your lender and allow them to take over. When you cease call contact with
your lender, it can be dangerous. It cuts off access to your options and
you run out of time to prevent foreclosure. By the time you realize what
is happening, you are already conned.
Scammers will do everything to cut off a homeowner's access to correct
information. They will win the homeowner's trust and warn the homeowner
to stay away from attorneys and counseling agencies on the grounds that
the attorneys and agencies are out to make money from the homeowner's
Once it is too late to save the home, the property is either taken by the
scammer or, having been drained of substantial equity through the scammer's
imposition of heavy fees and other charges, simply lost to foreclosure.
Many homeowners are then summarily evicted by their "rescuer"
from the home they once owned.
Don’t risk your home and livelihood on someone offering you empty
promises. Contact a legal professional and discuss your various options
during a free, initial consultation.