Vail Valley: Beware of foreclosure scams
Vail, CO, Colorado
When it comes to listening to bold promises on how to avoid foreclosure, if it sounds too good to be true, it probably is. Homeowners desperate for a way to save their homes from foreclosure should beware of phony schemes and fraud that have sprung up in recent years, and seek legitimate help.
According to the Federal Trade Commission, foreclosure “rescue” professionals and so-called assistance firms have but one goal – cheating you out of your money and sometimes out of your home.
Scam artists identify targets by researching public information regarding foreclosures. They often send a personalized letter to distressed homeowners and they may also rely on public advertising. They promise they will save homeowners’ homes, and may promise they can negotiate a better deal with a homeowner’s lender.
But there’s always a catch. Often these firms want you to pay an upfront fee. Sometimes scam artists require you make payments directly to them while they negotiate with your lender. In both cases, once the money leaves your hands, the scammer disappears soon after.
Other tactics include having individuals sign documents that surrender the title of their home to the scammer, or having individuals “rent-to-buy” their own home after surrendering title. The appeal of this scheme is that the homeowner is told they can remain in their home as a renter and repurchase it within a few years. But the terms of the deal are usually unfavorable for the homeowner, and the scam artist walks off with most of the home’s equity or worse – if they default on the loan, the homeowner is evicted.
A variation on the theme occurs when a scammer says they have a buyer for the home, asks the homeowner to transfer the deed. The scammer then rents out the home and keeps the profits while the foreclosure proceeds. Even worse, the homeowner is still responsible for the unpaid mortgage, because transferring a deed does not dismiss a mortgage obligation.
A final tactic is when a scam artist files a bankruptcy case in a person’s name, sometimes without their knowing about it. The scam artist keeps the fee for his “services” during a temporary pause in home foreclosure proceedings, while the individual ends up with the fallout from having a bankruptcy on his or her credit history.
How can a homeowner in distress remain aware of these schemes? The first rule of thumb is avoiding any business that offers an impossible guarantee of stopping the foreclosure process, no matter what your individual circumstances may be.
Other red flags include instructions not to contact your lender, lawyer, or credit and housing counselors; asking for money before providing services (and accepting payment only by cashier’s check or wire transfer); encouraging you to lease your home with the promise of buying it back later; offering to purchase your house for cash – but at a price that doesn’t reflect the current housing market; requesting that you make mortgage payments directly to the business instead of your lender; and instructing you to transfer your property deed or title to it.
Avoid businesses making any of these offers, and seek legitimate help instead.
Finding real help
The first step in dealing with foreclosure is to contact your lender directly. In many cases, there are options for renegotiating your payment schedule since many lenders want to avoid the high costs of foreclosure proceedings. You may also want to contact a credit counselor through the Homeownership Preservation Foundation, a nonprofit organization with a toll-free hotline (1-888-995-HOPE) that helps prevent foreclosures and works with homeowners at risk of losing their homes.
If the worst happens and you believe you’ve been scammed, help others avoid these pitfalls by reporting fraudulent activities. Contact the Federal Trade Commission, the Attorney General for your state, and also the local Better Business Bureau and provide details about the scam.
The Debt Doctor (970-376-0615) offers financial counseling for homeowners potentially facing foreclosure and other financial difficulties. Free public seminars regarding debt management and home ownership are also available through http://www.TheDebtDoctorLLC.com. Select the Seminar button to see schedules and sign up for the seminars.