Beware of Foreclosure Salvage Scams!
As explained in my blog on April 27, 2007, a large amount of subprime loans are going into default and because of this, the amount of home foreclosures have increased dramatically.
Scammers are now trying to cash in on this crisis by approaching these unfortunate homeowners and offering them "deals" that will supposedly save their house or pay their mortgage.
How they operate
In one scam, the homeowner is told if they surrender the title to their house, they will become a renter and will be allowed to buy their house back over a few years. The outcome is almost always that the homeowner, now renter, will lose their house and aren't able to buy it back. The scam artists then walk away with all the equity that the homeowner had built up in the home.
In another scam, scammers approach the homeowner and introduce themselves as "foreclosure consultants". These consultants then promise to persuade the homeowner's lender to negotiate, or they promise to find a buyer for the house before it is foreclosed upon. In some cases, homeowner's just sign a bunch of documents, not even knowing they have just signed over ownership of the house.
Be aware of warning signs that you are being scammed
• Be suspicious of any person or company that calls itself a mortgage consultant or foreclosure service.
• Don't trust anyone who uses flyers or goes door-to-door.
• Be suspicious of offers to lease back your home, so you can buy it back over time. These offers are never in your favor.
• Stick with the "if it is too good to be true, it probably is" mentality. Some examples are that they can "save your credit" or that they will "find a buyer in seven days".
Get it all in writing
• Don't ever let someone pressure you into signing a contract. Always review the documentation with a lawyer and don't ever sign anything that has blank lines or spaces. Information could be added after you sign that you will never know about.
• Do not engage in a verbal agreement with anyone. Verbal agreements pretty much mean nothing. Get everything in writing, make copies, and before signing anything, check the company out with the Better Business Bureau.
How to avoid the scams
As soon as you know that you will not be able to make your mortgage payments or as soon as you receive a foreclosure notice, contact your lender as soon as possible and chances are very good that they will negotiate your payment schedule. Working directly with your lender is your best defense against scammers. Lenders will be willing to work with you because foreclosures are expensive for them.
There are legitimate companies out there but they are far and few between.
