Protect Yourself Against Foreclosure Scams

Buying a house can be the happiest day of your life. You get to make memories and enjoy your home. But facing a foreclosure on your home can be the saddest day. Scam artists prey on fears of foreclosure to make money in mortgage loan and foreclosure scams.

While many foreclosure actions are legitimate, others are fraudulent. This article looks at how you can keep your home and finances safe from foreclosure scams. If you have questions about foreclosures or need representation, contact a local foreclosure lawyer.  

Red Flags for Foreclosure Scams

Watch out for individuals or companies that:

• Require you to pay any fees upfront for promised services like renegotiation, refinancing, loan modification, mortgage modification, lower interest rates, and debt cancellation
• Require you to transfer your property or sign over your deed based on a buy-back or return promise
• Promise to force your lender to cancel or modify your mortgage by finding mistakes in your loan documents
• Guarantee they can stop your foreclosure or tout a success rate in saving homes
• Advise you to stop communicating with your lender or stop making mortgage payments
• Ask you to make mortgage or other payments to anyone but your lender
• Require you to sign any agreements that you don’t understand or that contain blank spaces to be filled in later

Foreclosure Rescue Scams

The most prevalent foreclosure scam is the false promise of rescuing you and your home from your mortgage lender. These cons often target people who are behind on their mortgage payments.

Scammers pose as foreclosure consultants or mortgage consultants. They may promise to buy you more time to make payments or promise to renegotiate with the bank on your behalf. They may even claim they can set aside your mortgage entirely.

According to the Federal Trade Commission (FTC), there are common signs of many foreclosure rescue scams.

Bankruptcy Foreclosure Scams

Some scammers will offer to negotiate with your mortgage lender or pass on your mortgage payments if you pay them instead of your lender. Then, either with or without your knowledge, they may file for bankruptcy on your behalf.

Scam operators may claim that the bankruptcy filing will save your home from foreclosure. Or they will file behind your back to make future claims against them more difficult.

Filing for bankruptcy may delay foreclosure proceedings. However, it may not be the best option for you. If your bankruptcy proceedings have a problem, the court may dismiss the bankruptcy. You could be out thousands of dollars, and the foreclosure will continue.

Repurchase Plans or Lease-Back Scams

Other scam artists may promise to pay off the rest of your mortgage or buy you time while you repair your credit. All you need to do is sign the deed to your home over to their company or another individual. The offer will often describe the transfer as temporary. They’ll say you can stay in your home as a renter with an option or guarantee to buy the home back.

Once you’ve transferred the deed, you have relinquished any property rights in your home. There’s no obligation for the new owner to sell it back to you. The new legal owner could now evict you from the home.

Some relief scams involve moving the deed through multiple individuals or sham companies. They could involve taking out new mortgages on the home, often for hundreds of thousands of dollars more than your original mortgage. This could make it impossible for you to buy back your home even if your financial situation improves.

Cyberspace and Foreclosure Scams

In today’s digital age, criminals are constantly finding new ways to trick people, including distressed homeowners. You should always stay vigilant and protect your private information.

Foreclosure scams often start online. Scammers pretend to offer help or legal advice. They might create fake websites or send emails that look professional. They may even spoof legitimate companies, claiming they can stop your foreclosure immediately. These scammers often ask for personal information, such as your bank account or Social Security numbers. They may also demand upfront fees, claiming they’ll use this for filing costs or other services.

• Never give out personal information or money without verifying who you are dealing with. A reputable counseling agency shouldn’t guarantee that your foreclosure will be stopped without reviewing your situation. They shouldn’t ask for illegal advance fees. Legitimate companies also should not ask you to buy gift cards to pay the fees. 
• Always check the credentials of anyone offering to help you with foreclosure relief issues. You can look up their name or company on the internet. You can also check with the Better Business Bureau or ask for references.

What To Do if You Think You’ve Been Scammed

If you suspect a scam, contact your state’s attorney general’s office, the Consumer Financial Protection Bureau (CFPB), or the FTC. You can protect yourself from being a scam victim by staying cautious and vigilant. 

A foreclosure lawyer can advise you on your options and negotiate with your mortgage lender on your behalf. Legitimate help and legal representation can help you as you navigate through any foreclosure-related process.