Foreclosure Scams

Foreclosure Scams and Refinance Frauds:

Unscrupulous Opportunists Increasingly on the Prowl for Stressed and Struggling Homeowners

By Sharon Secor

Direct Lending Solutions Staff Writer

With the well-publicized increase in homeowners teetering on the edge of foreclosure has come an increase in those seeking to prey upon them. Foreclosure scams and refinancing frauds are becoming more prevalent as desperate homeowners struggle to find a way to keep their homes. Prevent yourself from becoming a victim by learning about the types of scams and frauds taking place today and by taking a pro-active and well-informed stance if you find yourself struggling with a mortgage or foreclosure, which will reduce your vulnerability to being taken advantage of by an unscrupulous opportunist.

Learn About Foreclosure Scams

The Wall Street Journal is one of many publications that have noted the increase of foreclosure scams. Consumer protection organizations, such as the Better Business Bureau, have taken steps to inform the public, issuing detailed press releases and adding fraud-related information to their websites. Teetering on the edge of foreclosure can be very stressful, and when you’re scrambling, trying to catch your footing and save your home, it is important not to allow yourself to become vulnerable to those who would prey upon you.

When you’re in such a position, the temptation to grasp at any rescue within reach can be strong. But, beware. Many foreclosure scams are packaged as rescues, with scammers posing as professionals with the power to take hold of the situation, engage in negotiations on your behalf, work deals to allow you to remain in your home and, in the event of foreclosure, work towards getting it back. All you have to do is pay them their fees, sign a few papers and breathe a sigh of relief as they handle everything.

Sounds almost too good to be true, right? That’s because it is. Often, what happens is the scammer merely performs routine tasks that you could do yourself, such as make phone calls and discuss the problem with the lender, perhaps working out a workable solution. However, when the scammer does it, you’ve got a lot less money to bargain with and the scammer doesn’t really care if you keep your home or not. Thus, they are inclined to promise anything, just to buy enough time to get away cleanly with as much money as they can get out of you. These scammers not only rob you of the money you need to work a real deal, but also of the time you could have invested into getting genuine assistance.

The papers that they ask you to sign? Well, in some foreclosure scams, the papers you are asked to sign transfers the title to the scammer, who will claim that you can rent the property and continue to live there while you get your financial footing back. What typically happens is that the scammer sucks the home equity out of the house, while collecting rent payments from you, and then sells it, putting you and your remaining possessions out on the street. Another paper signing scam is to make the homeowner believe that they are reinstating the mortgage agreement, when really they are surrendering the home to the lender. There are a variety of foreclosure scams that hinge on manipulating a signature out of a desperate homeowner.

Be very careful about what you sign. Read every word, and do not sign unless you are sure that you understand each and every term and condition listed. If there are sections of the form that are not filled in, do not sign it, because they can add anything they want to those portions of the document.

Beware Of Refinancing Frauds

These types of scams are closely related to foreclosure scams because, often, refinancing is the last ditch effort for a homeowner working to keep a home out of foreclosure. With credit tightening up, refinancing is not as easy as it has been in recent years. This leaves plenty of room for scammers to operate.

An informed and alert consumer is not going to fall victim to scammers. Therefore, before engaging in any type of refinancing agreement, make it your business to educate yourself to the highest degree possible. The wrong refinancing deal or a smooth scam can lead to you losing your home.

The Texas Attorney General recently issued a warning about equity skimming, a scam that can appear in many forms. This is one that foreclosure scammers can use, as well as those attempting to perpetrate refinancing and home equity loan frauds. In any form that this particular scam takes, the bottom line result is that the scammer manipulates the homeowner into signing papers that give the scammer the power to draw the equity out of the home, which often ends up with the homeowner losing the house they struggled so hard to keep.

Other refinancing frauds can involve hidden and/or excessive fees, surprise balloon payments, and the classic bait-and-switch move. There is a broad range of predatory practices in the realm of refinancing that seeks out sub-prime, financially stressed borrowers. You should be very careful with a lender that aggressively pursues you, especially today, when money is much tighter in the lending industries.

Educate yourself on how to detect and avoid foreclosure scams and refinancing frauds, and you reduce the chance of becoming a victim. Learn and understand the details of your mortgage agreement and don’t be afraid to talk to your lender if you are experiencing problems. If your situation is complex enough that you really do need outside help to negotiate and resolve the situation, choose from those who are verifiably reputable. Be very selective when it comes to making the types of financial deals that could put your home on the line. Taking such steps greatly reduces your vulnerability to being scammed out of your hard earned money and perhaps even your home.

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