As the number of homeowners looking for ways to avoid foreclosure has increased, so has the number of foreclosure rescue scams. Every day, scam artists come up with new and creative ways to cheat homeowners out of their money and property. So, it is important to know how to spot a scam when considering foreclosure rescue strategies.
How the Scammers Operate
Foreclosure rescue scammers prey on homeowners who are desperate to avoid foreclosure. They use half truths, outright lies, scare tactics, and threats to take advantage of distressed homeowners. Once a foreclosure rescue scammer has gotten a homeowner’s money and/or title to his property, he usually disappears without a trace.
Common Scams
The goal of the average foreclosure rescue scammer is to make a quick profit and move on to the next victim. Therefore, regardless of the scam being peddled, most scammers apply a great deal of pressure in an effort to force a homeowner into a hasty decision. Some of the most common foreclosure rescue scams are:
- Rent-to-buy;
- Equity skimming;
- Bait and switch;
- Phantom help;
- Fraudulent bankruptcy filing; and
- Partial interest bankruptcy filing.
How to Spot a Foreclosure Rescue Scam
Foreclosure rescue scammers are no different than other con artists; they use a victim’s fears, desperation, and uncertainty against him. Fortunately, there are a number of red flags that usually signal a foreclosure rescue scam is in play. These red flags include:
- Requiring payment of up-front fees. (In some states, this is illegal);
- Guaranteeing that the foreclosure will be stopped;
- Advising the homeowner to stop communicating with his lender, attorney, or credit counselor;
- Requiring a homeowner to make mortgage payments directly to the foreclosure rescue company;
- Only accepting payment in the form of a wire transfer or cashier’s check;
- Demanding that the homeowner transfer title to his property to the foreclosure rescue company or to a third party, usually identified as an investor;
- Insisting on completing the paperwork for the homeowner;
- Insisting that the homeowner sign a power of attorney authorizing an “employee” of the foreclosure rescue company to act on his behalf;
- Pressuring a homeowner to sign documents he has not read or does not understand; and
- Refusing to allow a homeowner to have the documents reviewed by an attorney before signing them.
Getting Legal Help
If you are seeking help saving your home from foreclosure, you should contact an experienced foreclosure defense attorney in your area. A foreclosure defense attorney will explain all legitimate foreclosure avoidance options to you and will assist you in formulating a viable plan to save your home from foreclosure.
