Scam artists are taking advantage of families in financial trouble who are seeking a way out of their indebtedness. Homeowners who are struggling to pay their mortgage or anxious to sell their property can be easy prey. Learn about common scams so that you can recognize and avoid them.
- Phony Counseling or Foreclosure Rescue Scams: This scam artist poses as a counselor and tells you he can negotiate a deal with your lender to save your house – if you pay him a fee first. Charging a fee for loan modification assistance is illegal.
- Fake “Government” Modification Programs: Some scammers may claim to offer “government approved” or “official government” loan modifications and may ask you to pay high, up-front fees to qualify for these programs. The scammer’s company name and website may sound like a real government agency. Contact your mortgage lender first if you have any questions. They can tell you if you qualify for any government programs to prevent foreclosure.
- Bait-and-Switch: This scam artist tries to convince you to sign documents for a “new loan modification” that will make your existing mortgage current. This is a trick. If you sign these documents, you will surrender the title of your house to the scam artist in exchange for a “rescue” loan. Never 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.
- Rent-to-Own or Leaseback Scheme: A scammer urges you to surrender the title of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. He may tell you that surrendering the title will permit a borrower with a better credit rating to get new financing – and keep you from losing your home. The scammer may have no intention of ever selling the home back to you. Never trust a person who pressures you to sign papers immediately.
- Bankruptcy to Avoid Foreclosure: This scammer may promise to negotiate with your lender or get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, he pockets the fee and files a bankruptcy case in your name – sometimes without your knowledge. Never release personal financial information online or over the phone.
