Avoiding Foreclosure Scams
As the number of foreclosures has increased, so has the number of foreclosure-related scams targeting consumers. Homeowners are urged to avoid counselors who charge an up-front fee and also to check the counselor's credentials. The Federal Reserve Board of Governors has released a list of tips and resources to help consumers avoid becoming victimized by foreclosure scams, locate a reputable housing counselor, and report suspicious activity
The vultures have begun to circle the increasing number of U.S. homeowners facing foreclosure. The Better Business Bureau has received complaints of foreclosure scams from every state and is warning consumers to be on the alert.
The current foreclosure crisis has been deemed one of the worst in U.S. history. A record number of people have already lost their homes, and more are expected to follow as interest rates reset and home prices continue to fall.
Homeowners are especially vulnerable right now, which means the opportunities are ripe for con artists who claim to offer foreclosure rescue services.
In recent months, the Better Business Bureau has received complaints from consumers in every state who claim to be a victim of a foreclosure rescue company. Many of the complaints are coming from states like Georgia, Ohio, and Colorado, where foreclosure rates are exceptionally high.
Homeowner reports vary, but generally start out the same. A foreclosure rescue company contacts the homeowner (or vice versa) and promises to stop the foreclosure action for a fee. Homeowners are usually told not to worry and not to contact their lender. Most assume everything will be okay...until they lose their house.
'A lot of these companies say, 'We will save your house or your money back.' Unfortunately, many complaints indicate that these are just words,' said Alison Preszler, a spokesperson for the BBB. 'If you're lucky you'll perhaps get part of what you paid them back, but chances are you won't get any money back AND you've lost your home.'
With new foreclosure rescue companies cropping up across the U.S. everyday, it is becoming increasingly difficult for homeowners to determine who is legit and who is not.
'The best advice I can offer for people whose homes are entering into foreclosure is to get in touch with your lender and STAY IN TOUCH. Your lender wants to keep you in your house and can work to renegotiate the terms of the loans,' says Preszler. 'Many mortgage foreclosure rescue companies convince you to stop talking to your lender and say that you can quit your worrying because they'll will work everything out for you.'
Preszler adds that there are companies that are reliable and offer foreclosure assistance, but homeowners need to research and check the company out with the BBB first to make sure they're on the up and up.
Watch out for "Predatory Loan Modification" companies...click here to read more
-Staff
The ads are popping up all over craigslist. Next you'll hear them on satellite radio and see them advertised in your local real estate rag: "Become A Loss Mitigator" "Enter The Exciting Field of Loss Mitigation" "Become a Certified Loss Mitigator" (that one always tickles me). Most of those people will be fly-by-nights looking for an easy mark who is severely down and easy to fool.
Technically speaking a Loss Mitigator works for a lender and has years of experience in the high finance world. They are charged with making sure the lender doesn't suffer any loss. To say they don't care about the borrower is not true but to say they care less about the borrower than the lender is more accurate.
Ask yourself when you see the words "loss mitigator" this question, "Who's loss?" Are they concerned with your loss? Are the concerned with the lenders loss? Here is the elephant in the board room issue: If the person calling themselves a "loss mitigator" is not either sworn to protect your loss or paid to protect the lender's loss then they are not a loss mitigator at all - they are an opportunist. It may not be that they are looking to take advantage of you (although it's likely they are) but to take advantage of your situation.
The new breed of "third party loss mitigator" is actually an old breed of what my dad would have called an ambulance chaser. Now, is it bad to chase ambulances? That's for YOU to decide. This new breed of independent "loss mitigators" wants one thing: for you to sell your home and for them to profit from the sale of your home. Honestly they really don't care about you or the lender so in actuality and by definition they are not mitigating loss nor are the charged or trusted with mitigation of loss.
I'm not just typing all of this to mitigate the prolification of this new breed of third party loss mitigators I'm writing it to tell you, Mr. or Mrs. Seller facing foreclosure, that these people do not represent your interest nor the lender's interest but their own interest. You are already in a serious situation and playing around with someone who took a course, attended a webinar or read a book is very -VERY likely to end in disaster for you.
Are You Being Scammed?
If you have been solicited by a company to help stop your foreclosure without you calling or requesting their services this may be a scam.
Are you being asked by a company to pay a LARGE fee without a contract or agreement stating what services specifically they will perform for you?
Are you promised guarantees that sound to good to be true?
Absolutely DO NOT sign any document that transfers ownership of your home unless this is what you want to do and you are sure about it.
Check with your local BBB or Chamber of Commerce for any negative reports about the company.
Always get the terms of your deal, guarantees, costs or promises in writing.
Bankruptcy Schemes – Several scams attempt to abuse the bankruptcy laws. For example, a con artist may ask you to give a partial interest in your home to one or more persons. Each holder of a partial interest can then file bankruptcy, one after another. The bankruptcy court will issue a “stay” order each time to stop foreclosure temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. In another kind of scam, a con artist may offer to obtain refinancing or negotiate a payment plan with your lender. If you may make payments to the con artist, he or she may keep the money rather than pay the lender on your behalf. The con artist may even file a bankruptcy case in your name, without your knowledge, as a part of the scam.
Bankruptcy laws provide important protections to consumers. Scams can only temporarily delay foreclosure, and they may keep you from using bankruptcy laws legitimately to address your financial problems. Signing over ownership of your home, or even partial ownership, can result in serious financial harm.
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