Recognizing Foreclosure Rescue Scams

Homeowners facing foreclosure face a tremendous amount of stress and anxiety for the future. In the face of such difficult times, many homeowners seek assistance from debt counselors and agencies that promise homeowners relief from their debt. While there are many reputable credit counseling agencies out there, it is important to be aware of the scams unscrupulous agencies employ to prey on the fears of homeowners facing foreclosure.

Common scams to be aware of include the following:

• Lease-Back Scams

These scams convince homeowners facing foreclosure to sign over the deed of their home to a con artist who promises to lease it back to them until they have enough money to buy it back. Unfortunately, lease-back scams don’t usually work out as hopeful homeowners expect. New landlord’s often increase rent or evict homeowners who are now tenants. Keep in mind that you will still owe money to your mortgage lender, and if the con artist does not make payments on your mortgage you will still be responsible for the delinquency.

• Bankruptcy Scams
  

A con artist may file for bankruptcy in your name without your knowledge or advise you to give partial interest in your home to other individuals who will then file bankruptcy successively in order to stay the foreclosure process. These practices are deceptive and only delay your home from being seized. Additionally, trying to manipulate bankruptcy laws can hurt your ability to file bankruptcy legitimately should you need to in the future.

• Bait-and-Switch Scams

Bait and switch scams occur when con artists tell homeowners they are signing one thing, but they are really signing another. For example, con artists may tell homeowners that they are signing papers to refinance or renegotiate the terms of their mortgage, but they are really signing over their homeownership rights. In these situations, victims still owe money on their mortgage, but no longer own their home.

• Phantom-Help Scams

Phantom-help scams occur when con artists offer to handle everything for a fee upfront. Con artists will usually try to dissuade debtors from talking to their lenders directly, promising to handle all communication for anxious homeowners. In these scams, con artists may also tell homeowners to make their mortgage payments directly to them and they will then pass the money on to your mortgage lender. This almost never happens and homeowners that are already in financial straits find themselves even deeper in the hole.

If you are not sure where to turn for help with your financial difficulties, it is a good idea to speak directly with your mortgage lender. Mortgage lenders are often willing to work with homeowners who have come on hard times, offering a number of options that can prevent foreclosure (see Avoiding Foreclosure). If you still need assistance with your debt contact your state’s attorney general’s office or the Better Business Bureau to find a legitimate debt management company.If you do decide to use a debt management company, do your homework and be cautious of any agency or consultant who:

• Contacts you unsolicited
• Promises to stop the foreclosure process no matter what your situation is
• Asks for a fee before providing services
• Wants you to sign paperwork without giving you a chance to thoroughly understand it and/or have an attorney look it over

It is often a good idea to utilize an attorney when you are facing home foreclosure. An attorney can help you understand what your rights and responsibilities are and help you develop a plan to save your home from foreclosure if that is possible. Additionally, an attorney can help you avoid losing your home to scam artists by providing you with the information you need to make wise choices during your financial difficulties.