Sunday, April 7, 2013

A Primer on Foreclosure Rescue Scams

Guest blog post
By Sarah Parr

Foreclosure rescue scam artists are some of the most heartless “businessmen” in the United States today. They entice desperate homeowners who fear losing their home with encouraging words and promised results, then run off with their money, their home or worse, both. Scam artists may look through foreclosure notices posted in public media and target clients from areas known as centers of foreclosure activity. They use common and widespread advertising methods to attract clients: fliers, radio ads, billboards, etc.

Foreclosure rescue and mortgage relief scams have proliferated in recent years, with an estimate of billions of dollars lost. There are three general schemes to look out for that could signal a foreclosure rescue or mortgage relief scam.

Upfront costs
Consumers often report unethical companies that charge clients for access to government programs and housing counseling. Qualification of specific government programs that aid in the loan modification process or foreclosure defense is free. It is also free to speak with a government agency-approved housing counselor, according to Information on the latest government program or agency-licensed housing counseling can be found easily on the Internet. Additionally, a company could be fraudulent if it asks for a large amount of money upfront for access to the latest government program or a recent mortgage settlement. Homeowners should also watch out for companies that advise homeowners to pay mortgages to them and not to the loan provider.

Promise of definite results
Aid against foreclosure or the reasonable modification of a loan is never guaranteed, and access to specific government programs may only be available for certain borrowers. Alas, scam artists will do anything to convince consumers that loan modifications and foreclosure defense carried out by their company are guaranteed. A scam artist will almost always pose as a member of a fake organization licensed by, or affiliated with, the government and claim that a homeowner qualifies for a specific government program that aids in homeowner relief.

So-called professionalism
Scam artists will try any scheme to appear authentic and reliable. Non-attorneys often pose as attorneys from law firms that only offer loan modification services, reports the New York Times. Some law firms even disguise as non-profit groups that offer loan workouts or forensic loan audits. Consumers should be distrustful of these lawyers, especially because most law firms provide loan modifications as one of many services and loan workouts and audits have been proven useless.

Another kind of phony professional, in a “bait and switch” tactic, may convince a client to quickly sign paperwork that signs their rights to their house away and gives them to the scam artist. Others act generous and suggest the owner sign away the house, but stay in it until he or she has recovered financially. They will reassure the former homeowner that he or she will be able to reclaim the house once he or she has improved money-wise. However, the scam artist will be able to evict the victims and claim the home.

People on the verge of losing their home should be cautious of the common schemes covered above. Also, homeowners who would like a loan modification or who are at risk of foreclosure should never avoid any communication from their lender. Free housing counseling is provided by government agency-certified housing counseling agencies, or by contacting the Homeowners’ HOPE Hotline.

1 comment:

  1. This is an incredible elaborate scheme, and I am not surprised that people fall for this con. If you are in such trouble that your house is about to be foreclosed on I bet you would be looking for any way out possible. This can make things even more dangerous because when this offer comes along you jump right at it because you are desperate. This is horrible people do this, take advantage of someone when they are at their most vulnerable spot. It is awful and hopefully people are aware of the fact that this could happen to them one day.