Protect Yourself Against Foreclosure Scams

Buying a house can be the happiest day of your life. And facing a foreclosure on your home can be the saddest. And to make matters worse, criminals will prey on a person’s fears to take advantage.

While many foreclosure actions are legitimate, some — and some offers to prevent foreclosure — are not. Here’s how to keep you, and your home, safe from foreclosure scams.

Foreclosure Rescue Scams

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

Scammers posing as “foreclosure consultants” or “mortgage consultants” may promise to buy you more time to make payments, renegotiate with the bank on your behalf, or claim that they can set aside your mortgage entirely.

According to the Federal Trade Commission, you can often identify foreclosure rescue scams as individuals or companies that:

  • Require you to pay fees in advance
  • 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 percentage success rate in saving homes
  • Advise you to stop communicating with your lender or stop making mortgage payments

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.

While filing for bankruptcy yourself may delay foreclosure proceedings, the delay is only temporary. And if someone else files for you or you are otherwise not involved in the bankruptcy proceedings, the court will dismiss the bankruptcy and the foreclosure will continue as planned.

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 and allow you to stay in your home as a renter with an option or “guarantee” to buy the home back.

Here’s the problem: once you have transferred the deed, you have relinquished any property rights in your home and there is no obligation for the new owner to sell it back to you. In fact, a new legal owner could now evict you from the home.

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

Do’s and Don’ts of Foreclosure Loans

Facing foreclosure can be a frightening time. But don’t let scammers take advantage of that fear by doing something drastic. You should absolutely avoid:

  • Paying any fees upfront for promised services like renegotiation, refinancing, and debt cancellation
  • Transferring your property or sign over your deed based on a buy-back or return promise
  • Breaking off contact or ceasing mortgage payments to your lender
  • Making mortgage or other payments to anyone but your lender
  • Signing any agreements that you don’t understand or that contain blank spaces to be filled in later

Your best option if you are faced with a foreclosure action is to contact an experienced real estate attorney who can advise you on your options and perhaps negotiate with your mortgage lender on your behalf.

Speak to an Experienced Foreclosure Scam Attorney Today

This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified foreclosure scam lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local foreclosure scam attorney to discuss your specific legal situation.

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