AVOID MORTGAGE SCAMS!
Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief, but fail to deliver. In reality, they make a quick profit by charging high fees or collecting mortgage payments, and keeping the money, rather than passing it on to the lender. Usually they use advertising messages like “Stop Foreclosure Now!” They are also known to use a variety of tactics to take your money, and sometimes your home as well. Knowing what types of scams are most common is the best way to avoid being conned.
Types of Mortgage Scams:
Phony Counseling: Some scam artists tell their victims that they can negotiate a deal with their lender if they pay a fee first. They tell them not to contact their lender and to let the “negotiator” handle the details. Once the fee is paid, the crook takes off with their money without contacting the lender.
Bait and Switch: Other con artists trick their victims into signing documents for a new loan to make the existing mortgage current. Unfortunately the distressed homeowner could be surrendering the title of the house to a scam artist in exchange for a worthless or expensive “rescue” loan.
Rent-to-Buy Scheme: Some victims are told to surrender the title of their home as part of a deal that allows them to stay in the home as a renter, and buy it back during the next few years. But deals like this usually are so expensive that buying back the home becomes impossible. In the end, they lose their home and the scam artist takes off with the equity that they had built up.
Bankruptcy Foreclosure: A few of the fraudsters may promise to negotiate with the victim’s lender or get refinancing on their behalf if they pay a fee in advance. Instead, they pocket the fee and file for bankruptcy in the homeowner’s name — sometimes without their knowledge.
How to Find Legitimate Help?
Homeowners who are having trouble paying their mortgage should contact their lender immediately. They may be able to negotiate a new repayment schedule. For more information, read “Mortgage Payments Sending You Reeling? Here’s What to Do,” at http://ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm
To learn more about shopping for mortgages, visit http://www.ftc.gov/credit and click on “Mortgages/ Real Estate.”
Who to Contact if you’ve Been the Victim of a Mortgage Scam?
The U.S. Federal Trade Commission works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, contact: http://www.ftc.gov/ or 877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
In general, be suspicious of:
• Anyone who wants the deed to your house for any reason, whether it’s to clean up your credit or obtain special” financing from an investor.
• Anyone who offers to rent your house back to you until you can get back on your feet.
• Lenders who encourage you to borrow more than you need or more than the value of your home.
• Terms that change at the last minute or offer next-day approval based on prepayments or up-front fees.
• Forms you do not understand or that contain blank spaces “to be filled in later.”
• Beware of phony credit counseling agencies charging high fees for financial counseling services you can get for little or no charge through non-profit agencies.
Red Flags for Mortgage Scams