With foreclosure being such a major problem in the United States today, it is tempting to jump at any offer of mortgage loan help. However, some of these offers to help homeowners avoid foreclosure are, actually, too good to be true.
As more and more homeowners become desperate for a way to keep their homes, a number of scams are emerging to take advantage of the situation. These scams promise mortgage rate reductions or other means of saving the homes of those struggling to make their payments.
In any form, these scams are incredibly damaging to people already struggling with debt and foreclosure. It is important to be aware of the threat the scams can pose, and keep a wary eye out for any offers that seem suspicious.
- Foreclosure scams will usually begin with an offer that sounds too good to be true. Such offers will build on the hopes and needs of desperate people, but will then do very little to solve actual problems. Quite frequently, these scams will advertise their services through fliers, phone calls, or publicly-posted advertisements.
- After payment, victims will be asked to break off contact with any current financial advisors and with the lender. This is the opposite of what homeowners facing substantial mortgage debt problems and foreclosure ought to be doing.
- There are three main categories of foreclosure scams: first is the phantom help scam, when a service will charge extremely high fees for very little help. These scams may conduct basic services, such as making phone calls or filing paperwork, that the client could have done themselves.
The second most common kind of foreclosure scam is the bailout. With this scam, the service will “bail out” the homeowner by helping them get rid of their home. However, the result is that the scammer will persuade the homeowner to surrender the title to their property, usually on the promise that the homeowner can stay on as a renter and ultimately buy the property back. In the end, the homeowner usually cannot get their home back, loses their equity, and often even gets evicted as a renter.
The last kind of common foreclosure scam is the “bait and switch,” which generally involves a homeowner being coerced into signing away ownership of their home. Scammers frequently tell homeowners that they are signing loan documents or some other kind of mundane paperwork, when in actuality they are signing forged documents that will give the scammers ownership of the home. In addition, the homeowner is usually still responsible for the mortgage, but will not even have the property asset in their name.