Although the market for homes is showing signs of improvement, many homeowners are still struggling and dealing with a possible foreclosure. Underwater homeowners, paired with slowing business or job prospects, have created a goldmine for fraudsters seeking to take advantage of the situation. Homeowners faced with this situation must beware of scams or con-artists that promise to save their homes or lower their monthly mortgage payments.
If you face the possibility of losing your home to foreclosure, carefully select a licensed attorney to assist you. If you are contacted by a foreclosure relief company, be aware of the possibility that it may be a fraud. According to the Federal Trade Commission (“FTC”), fraudsters use a variety of tactics to locate homeowners in distress, including, sifting through newspaper, internet, or court documents to identify distressed homeowners and following up with a personal letter to the homeowner. The scam may include a simple message such as “Stop foreclosure now!” “Get a loan modification!” “100% Money Back Guarantee!”
Once the con-artist has your attention, he or she will use a variety of methods to get your money. For example, in exchange for an up-front fee, the scam artist offers to negotiate a deal with your lender to reduce the monthly payment. Or to have a “forensic loan auditor” review your mortgage documents to determine whether your lender complied with the law. Or ask you to surrender your title as part of a deal that allows you to stay as a renter and buy it back later.
In almost every case, these are scams that allow the fraudster to take your money and run or skim the equity out of your home. It is important for homeowners to know their rights. The FTC has a rule that makes it illegal for one of these companies to charge a penny until after your lender makes a written offer to modify your loan and you accept that offer. The FTC’s rule also requires the company to disclose key information, including the fact that they are not associated with the government, that their services have not been approved by the government or your lender.
Don’t let the stress of a pending foreclosure lead you into deeper problems. Know your rights and be careful out there.
Bill Martin is a former B-52 and B-1B pilot and Senior Attorney for the Federal Deposit Insurance Corporation. He is currently a partner in the law firm of Keefe, Anchors & Gordon in Fort Walton Beach, Florida.