Foreclosure is a process where a lender takes possession of the borrower’s property when they default on their mortgage payments. Foreclosure scams have become rampant, and it’s essential to know how to protect yourself from falling prey to these fraudsters.
Here are some common foreclosure scams that you should be aware of:
1. The phantom help scam
In this type of scam, someone posing as a foreclosure assistance company offers you help in stopping your foreclosure. They may claim that they have special connections with lenders or government agencies and can get your loan modified or even wipe out your debt entirely.
They will ask you for an upfront fee before providing any services. Once you pay the money, they disappear without helping you at all.
To avoid such scams, always research thoroughly before working with any company claiming to offer foreclosure assistance services. Check if they are licensed and registered with relevant regulatory bodies, read reviews from other clients who have used their services, and be wary of anyone asking for upfront fees.
2. Bait-and-switch scam
This type of scam involves luring homeowners into signing documents that transfer ownership of their home to another party unknowingly. The scammers may use fake documents disguised as official forms from the homeowner’s bank or government agency.
Once the transfer is complete, the new owner will evict the homeowner and sell off the property without paying them anything.
To avoid bait-and-switch scams, it’s vital to verify all documents presented by anyone offering foreclosure assistance services carefully. You should also check if there are any liens on your property or legal proceedings against it before agreeing to sign over its ownership rights.
3. Rent-to-buy scheme
In this type of scam, con artists pose as real estate investors looking for properties in distress situations like foreclosures. They convince homeowners facing foreclosure that they can buy their homes and rent them back until they’re financially stable enough to repurchase them fully.
However, once you agree to the deal and move out, the scammers will collect rent from other tenants without paying anything towards your mortgage. Eventually, they’ll disappear with all the money, leaving you with a foreclosure on your credit report.
To avoid such scams, always conduct background checks on anyone claiming to be an investor before signing any agreements. Verify their credentials, references and check if they have a history of fraudulent activities.
4. Fake government agency scam
In this type of scam, fraudsters pose as government agencies or officials offering foreclosure assistance services. They may use official-sounding names like “Federal Housing Assistance Program” or “National Mortgage Relief Center.”
They will ask for personal information such as social security numbers and bank account details under the pretext of verifying eligibility for loan modification programs.
Once they obtain this information, they can use it to commit identity theft or drain your bank accounts.
To avoid fake government agency scams, always verify any calls or emails received from alleged government agencies by contacting them directly through their official phone numbers or websites.
5. Bankruptcy foreclosure scam
In this type of scam, fraudsters prey on desperate homeowners facing foreclosure by offering help in filing for bankruptcy protection.
They charge exorbitant fees upfront but provide little or no actual legal representation in court. The result is that you lose both your home and thousands of dollars in legal fees paid to these con artists.
To avoid bankruptcy foreclosure scams, work with reputable bankruptcy attorneys who are licensed by relevant regulatory bodies and have a proven track record of helping clients successfully navigate through Chapter 7 or Chapter 13 bankruptcies without losing their homes.
Conclusion
Foreclosure scams can cause significant financial damage to unsuspecting homeowners who are already struggling financially. Be vigilant about anyone offering quick fixes for your mortgage problems as most often than not; it’s too good to be true.
Remember always research thoroughly before working with any company claiming to offer foreclosure assistance services, verify all documents presented carefully; conduct background checks on anyone claiming to be an investor, and contact government agencies directly to verify any calls or emails received from them.