If your home is in foreclosure, you are at risk of being a victim of a foreclosure scam. Con artists prey on the vulnerable and people losing their homes fall into this category as they are desperate to save their homes and under a lot of stress. It is relatively easy for a con artist to obtain the names and the property descriptions of homes in foreclosure as that is public information. Then, the con artist contacts the homeowner by letter, by telephone or in person or they solicit you through a radio or television ad and make an offer to save the home from foreclosure.
In reality they are setting in motion activities that will ultimately lead to the homeowner not only losing their home, but in some cases, actually paying thousands of dollars in the process. It’s important to understand how foreclosure scams often work and how to protect yourself against becoming a victim of a foreclosure scam.
A bankruptcy lawyer is well versed on the foreclosure process and will help determine the authenticity of your situation.
There are a number of kinds of foreclosure scams and new variations are constantly occurring. This is why it is important to seek the help of a legitimate professional such as a bankruptcy attorney or government approved credit counselor to assist you in understanding the options available to you.
Common Types of Foreclosure Scams
- The Forensic Audit is where a scammer has an expert review your documents looking for a mistake on the mortgage documents which the scammer says can reduce the amount you owe or cause the mortgage lender to cancel your loan altogether. The Federal Trade Commission reports that there is zero evidence that a forensic loan audit will help you in any way and it usually costs you some amount of money for the scammer to arrange to have the audit done.1`
- Another type of common scam is when the con artist tells you that, for a fee, they will negotiate with your lender to reduce your monthly mortgage payments. Once you pay the fee, the con artist disappears. Worse yet, the con artist may tell you to give them the monthly payment and they will pay your mortgage company when in reality they will just be pocketing your money.
- Rent-to-buy is another common foreclosure fraud. In this scenario, the con artist instructs you to sign over the title to your home to them. Then they will rent your home to you and you can eventually buy it back from them when you get back on your feet financially. Most often the con artist sets the price of the home so high that you can’t possibly buy it back or they keep raising the monthly rental fees so that you can’t afford to stay in the home.
- A more complicated scam is when the con artist tells you they will find a buyer for your home if you sign over the deed and move off the property. With the deed in their name, the con artist rents the home out, doesn’t pay the mortgage and keeps the rent monies until the home is again in foreclosure. You and the renters end up on the losing end of this scheme.
Ways to Protect Yourself Against a Mortgage Foreclosure Scam
In addition to not falling for the above scams, there are other tips to protect against foreclosure scammers.
Keep paying your mortgage payments and always pay your mortgage directly to your mortgage lender. Never let a scammer convince you to make your payments to them so they can pay your mortgage company.2
Don’t provide any personal information, like your Social Security number, to someone who claims to be able to help you stop your mortgage foreclosure without checking to make sure the company or person is legitimate.
Don’t sign any documents without having them reviewed by a lawyer or independent expert.3
Don’t pay any money to any foreclosure assistance company until you have a written offer from your lender, granting you the relief you seek, and you have formally accepted the offer as it is actually illegal for a company to charge you until this sequence of events occurs.4
The company must also let you know who they work for and warn you if anything they suggest may damage your credit score or cause you to lose your home. If an assistance company tells you to stop talking to your mortgage lender, that is illegal, and is a sign that they may be trying to scam you.
Many government agencies provide advice and assistance when you are facing mortgage foreclosure. There is never a charge for this assistance. The Making Home Affordable (MHA) program provides help, including free counseling on keeping you in your home or getting you out of your home safely. They can be reached at the MHA website5
Furthermore, if you have any questions about the foreclosure process or are facing foreclosure on your Massachusetts home, the bankruptcy attorneys at Hines Law Offices can help. Our Bankruptcy Firm has helped countless clients by stopping foreclosure and achieving debt relief. If you are looking for an experienced bankruptcy lawyer who will provide honest advice on your options, look no further, contact us today to schedule a Free Consultation.
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1,4 How to Spot a Foreclosure Scam by Dana George, August 27, 2020
Link: https://www.fool.com/the-ascent/mortgages/articles/how-spot-foreclosure-scam/
2,3 Foreclosure
Link: https://www.usa.gov/foreclosure
5 Making Home Affordable Website
Link: https://www.makinghomeaffordable.gov/
6 Home Lending and Foreclosure Rescue Scams, Michigan Dept. of Attorney General
Link: https://www.michigan.gov/ag/consumer-protection/consumer-alerts/consumer-alerts/credit/home-lending-foresclosure-rescue