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 are
- 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
Beware of Foreclosure Rescue Scams - Help Is Free!
- There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.
- Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away!
- Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
- Never submit your mortgage payments to anyone other than your mortgage company without their approval.
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.