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 upon you 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, The Bailout and The Bait and Switch.
In Phantom Help, the so called rescuer will charge out outrageous fees for light-duty phone calls or paperwork you can easily do. 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 seeking qualified help.
In bailout, the rescuer deceives you into signing over 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 onerous that the buy-back becomes impossible, you loose possession and the rescuer walks off with most or all of the equity.
In 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.
Scammers approach homeowners in many ways including a straightforward phone call or 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 on hand. This can lead you to make hasty decisions without consulting others. Scammers almost always highlight the lack of time and insist that you take 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. Scammers 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 misfortune.
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.