Foreclosure Rescue Scams
Foreclosure scams come in many forms, but at the heart of each is a false promise that the firm will save the consumer's home. The Federal Trade Commission (FTC) urges consumers who are looking for foreclosure prevention help to avoid any company that:
- guarantees to stop the foreclosure process --- no matter what your circumstances
- instructs you not to contact your lender, lawyer, or credit or housing counselor
- collects a fee before providing you with any services
- encourages you to lease your home so you can buy it back over time
- tells you to make your mortgage payments directly to it, rather than to your lender
- tells you to transfer your property deed or title to it
The FTC says that consumers having trouble paying the mortgage or who have gotten a foreclosure notice should contact their lender immediately. They may be able to negotiate a new payment schedule. Legitimate help is available through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure. To learn more, visit www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm
Common Scams
Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far away from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
- The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges outrageous fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
- The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme 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.
Visit the following links for more information on "Foreclosure Rescue Scams" and how to avoid becoming a victim:
OCC Consumer Tips to Avoid Foreclosure Rescue Scams
National Consumer Law Center, Inc.’s Tips For Consumers On Avoiding Foreclosure “Rescue” Scams
Freddie Mac: Avoiding Foreclosure and Beware of Scam Artists
HUD: How to Avoid Foreclosure and Foreclosure Prevention Companies
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