Avoiding Foreclosure Scams

The rise of foreclosure proceedings across the country has been coupled with a number of unscrupulous individuals and unethical, if not downright illegally practicing, companies seeking to take advantage of a pre-existing crisis in your life. The information provided below is a cursory look and basic strategy on protecting yourself from foreclosure scams, however, the counsel of a real estate attorney cannot be underrated and generally is irreplaceable when it comes to foreclosure matters.

Don't Be a Common Victim to These Common Foreclosure Scams

Foreclosure scam artists essentially prey on the desperation that ensues as individuals and their families struggle to save their homes from foreclosure. The incentive, or bait, to even begin working with a foreclosure scam artists stems from the ability of these individuals to convince struggling homeowners of their ability to save the homeowner's home. Foreclosure scam artists will operate under a number of titles, whether as individuals or companies including:

  • Foreclosure "rescue" professionals
  • Debt management firms
  • Foreclosure experts
  • Foreclosure prevention firms
  • Foreclosure management firms or representatives
  • Lender and creditor liaisons for distressed homeowners

This list is far from comprehensive as well, considering new foreclosure scams are implemented each and every day, with more popping up in direct correlation to the rising number of homes facing foreclosure today. The aforementioned titles and companies will contact homeowners in a variety of methods, which all will require the homeowner responding to the solicitation of the scammer's assistance. The main function of these scams is to convince homeowners to place their money in the hands of the foreclosure scam perpetrators under the guise of these individuals and companies being able to save their homes. Some of the common devious tactics that foreclosure scams will use to steal your money under the premise of stopping foreclosure include:

  • Foreclosure management or assistance, with upfront fees or retainers
  • Asking homeowners to pay their mortgage bills directly to the foreclosure firm, who will then "negotiate" with the banks
  • Signing documents under the premise of a new loan to prevent foreclosure, which actually turns over the ownership of your home to the foreclosure scammer
  • Convincing homeowners to turn over the title, or deed, of their home to prevent foreclosure including variations of rent to own, home buy back schemes, or simple outright fraud and deception
  • Implementing a bankruptcy proceeding for homeowners for a fee

The far reaching consequences of these scams will at best end when a foreclosure scammer simply has your money and disappears. In other instances, scammers will eventually take control of your home and the equity within, while demanding rent money from you as well. In other instances, a foreclosure scam company will request that they exclusively handle the negotiations and payments with your lenders and creditors, which requires them receiving all bill payments. Eventually, these scammers will disappear with your money and potentially your home, regardless of the promises or guarantees they make.

Indisputable Signs that This Is a Foreclosure Scam

The formal and judicial process of foreclosure in each given state makes many of the promises that foreclosure scams offer simply a non-existent reality. Many of these scams will prey on the fact the average homeowner is not aware of their rights and the process of foreclosure in their state. Some of these guarantees, promises, or warranties may come in a formal contract or writing, or be a soothing reassurance from a scam company's representative. In either context, they are false and simply being said to convince an illegal exchange of money that will only worsen the financial crisis you are currently facing. Some common statements that foreclosure scam artists and companies will make, that should alert homeowners to the presence of fraud include:

  • Promises to stop foreclosure without question
  • Requests homeowners to transfer home deed or title
  • Requests mortgage payments be made directly to the foreclosure firm
  • Offers to buy your home for cash, often at a serious market devaluation
  • Requires the company representatives filling out all foreclosure related paperwork for you
  • Demands you do not contact lenders or foreclosure counselors
  • Requires an upfront fee or retainer for foreclosure prevention services
  • Pressures you into signing documents with little or no reading on your part

Where Real Foreclosure Help Can Be Found

With so many bad places eagerly waiting for distressed homeowners to turn for help, there are organizations and individuals that will honestly help consumers assess their homeownership and foreclosure problems and make suggestions on how to proceed. For individuals facing foreclosure or who believe they have become a victim of foreclosure fraud, a real estate attorney can assist in counseling clients, as well as pursuing any allegations of foreclosure fraud or deceptive business practices.

Local, state, and the federal government agencies such as the Department of Housing and Urban Development, also offer a host of information, resources, and personal counseling in regards to preventing foreclosure and assisting homeowners through this confusing and terrifying process. Also, many homeowners fail to realize that lenders themselves do not want to see a home foreclosed upon. In fact, industry statistics note that most lenders lose an average of $50,000 per home foreclosure. For this reason, most lenders are more than willing to assist homeowners that are communicative and willing to work alongside, rather than against, lenders in rectifying their foreclosure issues and potentially, still keep their home.

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