How Foreclosure Scams Work
A foreclosure scam artist finds and targets a homeowner facing foreclosure. The scam artist will search newspapers for public foreclosure notices, browse the internet and chat rooms, search through public court filings at the Court house. Once they target an unsuspecting homeowner, who is already in an emotionally vulnerable state, often times the scam artist will send personalized letters, make telephone calls, or even show up in person to talk to the homeowner. Other methods may be through advertising billboards, signs at bus stops, flyers, even radio and television ads! Their messages are usually simple, direct and to the point:
- Stop Foreclosure Now!
- We guarantee to stop your foreclosure.
- Keep Your Home. We know your home is scheduled to be sold. No Problem!
- We have special relationships within many banks that can speed up case approvals.
- We Can Save Your Home. Guaranteed. Free Consultation
- We stop foreclosures everyday. Our team of professionals can stop yours this week!
After they get your attention, the scam artists have a number of ways to take advantage of you and steal your money. Fraudulent foreclosure rescue professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Here are just some of them:
Phantom Help or Phony Counseling
The scam artist promises that he or she can negotiate a deal with your mortgage company to save your home BUT you have to pay the scam artist an upfront fee first! The scam artist might tell you not to contact your lender, lawyer, or credit counselor, because the scam artist will handle all the details. Once you pay the fee, the scam artist takes off with your money! Variations of the scam include the scam artist insisting that you make all your mortgage payments directly to the scam artist while he negotiates with your mortgage company which the scam artist pockets and steals before disappearing.
Bait-and-Switch
The scam artist tricks you into signing papers that transfer ownership of your home to the scam artist! The scam artist might tell you that you're signing documents for a loan modification or refinancing that will make your mortgage current but in reality you've just given the scam artist your home!
Rent-to-Buy Scheme
In this scam, the scam artist tells you to sign over the title to your home as part of a deal that allows you to remain in your home but now you will be renting from the scam artist! The scam artist might promise that you can buy your home back in a few years but be very careful because the terms of this deal are make it almost impossible to ever get the home back. You end up losing your home, the equity in your home, and you may still be evicted! Or the scam artist might raise your rent to the point you can no longer pay it and then the scam artist evicts you, and then sells your house for a profit!
In a similar equity-skimming situation, the scam artist offers to find a buyer for your home, but only if you sign over the deed and move out. The scam artist promises to pay you a portion of the profit when the home sells. Once you transfer the deed, the scam artist simply rents out the home and pockets the proceeds while your lender proceeds with the foreclosure. In the end, you lose your home and you're still responsible for the unpaid mortgage. That's because transferring the deed does nothing to transfer your mortgage obligation.
Bankruptcy Foreclosure
The scam artist promises to negotiate with your lender and get refinancing on your behalf if you pay a fee up front. But instead of contacting your mortgage company or negotiating your mortgage, the scam artist pockets your money, and files bankruptcy in your name without even telling you! A bankruptcy filing often pauses a home foreclosure, but only temporarily. Bankruptcy is complicated, expensive, and permanent. Bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job.
Sometimes bankruptcy is a legit option for a homeowner facing foreclosure; sometimes it is the only option. But ALWAYS consult with a bankruptcy attorney before doing anything. Only a bankruptcy attorney licensed in your state can legally advise you about bankruptcy and represent you in bankruptcy court!
If you are approached by a scam artist or if you have been the victim of mortgage fraud, REPORT IT! Call your state and local law enforcement or consumer protection agency! In Florida, if you believe you have been taken advantage of, call the Florida Attorney General's Fraud Hotline at 1-866-9-NO-SCAM or visit http://myfloridalegal.com/mortgagefraud to file a complaint online.
And if you have any questions, never be afraid to consult with an experienced attorney, like the lawyers at the Byrne Law Group by calling 813-413-6565 for a FREE consultation!