Facing foreclosure of your home is a frightful situation, and scammers prey on that desperation. They offer quick fixes and guaranteed solutions that sound too good to be true, because often, they are.
Foreclosure rescue scammers often promise relief through refinancing, but this ends up being on unfavorable terms, such as high interest rates or accelerated payments. In addition, they usually charge high fees for themselves, some of them upfront. In the worst-case scenario, they may take ownership of the property in question while providing little or no benefit to the debtor.
While there are several variations in mortgage foreclosure rescue scams, they generally fall into one of these three categories:
- Phantom services — Beware of foreclosure rescuers who charge high upfront fees for services you can do yourself, such as negotiating with your lender. In many cases, the rescuers may do nothing. In extreme cases, they might disappear with your money, leaving you further behind on your mortgage.
- Sale and leaseback — The rescuer may offer to buy your home to prevent foreclosure and then lease it back to you with the prospect of buying it back later. The reality is that the scammer leaves you paying unfair rent for your own former home, with little chance of regaining it.
- Bait and switch — This scam hinges on tricking you into signing over your home’s title. The scammer might create confusion with paperwork, making you believe you’re signing for a modification loan or foreclosure prevention plan. In reality, you’re conveying ownership.
It’s not always immediately apparent that one of these scams is in play. Here some red flags to watch out for:
- Unsolicited contact — Legitimate lenders will only contact you if you have an existing relationship. Be wary of anyone claiming to be from your lender without proof.
- Upfront fees — Reputable foreclosure prevention assistance won’t require upfront fees, especially via wire transfer.
- Urging ceasing of contact with lender — Don’t let anyone advise you to cut off communication with your lender upon the promise that they will take over.
- Unrealistic offers — If someone offers to buy your home well above market value, it’s likely a scam.
- High-pressure tactics — Legitimate counselors will guide you through options without urging you to take immediate action. Don’t be rushed into signing anything you’re unsure of.
If you’re facing foreclosure, there are legitimate remedies available for keeping your home. The most potent is a Chapter 13 bankruptcy. Once you file for this relief, an automatic stay goes into effect that stops your lender from proceeding with foreclosure and other collection efforts. This lets you pay off mortgage arrears over a period of time (as long as five years) while getting current payments on track.
Jeff Field & Associates in Scottdale, Georgia, we help homeowners use Chapter 13 bankruptcy to fight foreclosure and obtain mortgage debt relief. Call us today at 404-381-1278 or contact us online to arrange a free consultation.