Mortgage Foreclosure Rescue Scams

Mortgage foreclosure rescue scams come in many variations, but they can be classified into three primary categories or types. All three of these types of foreclosure rescue scams have one thing in common: they are designed to take advantage of individuals who are trying to save their home from foreclosure.

The first scenario is characterized by the payment of an upfront fee to the fraudster who agrees to assist his clients with a potential foreclosure by providing information and counseling on how to stop the foreclosure. Sometimes a scam artist will provide assistance by filing for bankruptcy in the names of his victims, usually without their approval or knowledge. While filing for bankruptcy may delay home foreclosure, it will not stop it, and the victim may be left with both a foreclosure and the payment of fees, such as a fee for a bankruptcy history, beyond the upfront fee already charged by the fraudster. Assistance may also come in the form of information provided to victims on how to eliminate their debt altogether. Finally, the scam artist may collect upfront fees and just disappear, leaving their victim in the middle of the foreclosure process and financially worse off.

The second scenario of a foreclosure rescue scam involves homeowners signing the deed to their home over to the fraudster. Victims may be told that the deed transfer will only be temporary and that they will be able to get their home back in the future. Promises that the homeowners can remain in their home and pay rent until they buy back their home may be made. However, once a scam artist has the deed transferred, he may then sell the property and/or take out loans to strip away any equity that may be in the home. In some situations, the original mortgage may not have been paid off and will remain the responsibility of the victim.

In a final type of mortgage foreclosure rescue scam, the fraudster may refinance the victim's home. In one refinance scenario, the scam artist will actually refinance the victim's home; however, the terms will be so excessive that the homeowner will eventually default. Once the victim defaults, the scam artist will foreclose on the victim's home. In other situations, the scam artist may claim to be working with the victim's lender and require payments to be made directly to him. All the while, the fraudster will be keeping the fees that were paid for the service and the payments that were supposedly going to pay for the home. Eventually, the victim's home will be foreclosed upon and the victim will lose much needed monies.

Foreclosure rescue scam artists use many tactics to locate desperate individuals who are trying to save their home from foreclosure. They advertise on telephone poles, newspapers and over the Internet. Also, because state law requires the filing of a Notice of Default with county clerk offices when homeowners stop paying their mortgage, scam artists often research these records and contact potential victims directly. They may use different approaches, but the bottom line is that foreclosure rescue scam artists are looking to make a fast profit by preying on vulnerable individuals who are trying to save their home, often their most valuable asset.

Tips for Preventing

• Contact a real estate attorney before entering into any agreements or signing any documents.

• If it sounds too good to be true, it probably is.

• Make your mortgage payments directly to your mortgage company.

• Be leery when fees are required to be collected before you receive any services.

• Do not sign away your deed for the promise of assistance with your foreclosure; do not believe that the deed transfer will be temporary. Once you sign away your deed, you no longer own the house. It can be sold, be stripped of equity, and you may still end up responsible for your original mortgage.