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Mortgage Foreclosure Scams

Posted by David Falvey on Monday, June 7th, 2010 - 543 views

Foreclosure Notice? Mortgage “Experts” to the Rescue!
–But Beware of Greeks Bearing Gifts!

The day you’ve been dreading: a foreclosure notice from your bank arrives in the mailbox. Your mortgage payments have been late—or not paid at all. You’re about to lose your home.

Then you get a call from a “mortgage specialist,” claiming years of mortgage and legal expertise—who promises to make things right with your lender and save your home. Just pay him some upfront fees—hundreds or thousands of dollars—and you’ll be able to rest easy, secure in your house. Sounds like a plan…

But it is a scam designed to bilk you of not only the fees you pay—but eventually your home as well!

How this mortgage scam works

Foreclosure notices are public records; they are filed at city hall. Unscrupulous scam artists look them up to find prospects for their mortgage swindles. That’s how they know you are in foreclosure trouble—and why you get unsolicited phone calls from them.

They take advantage of your desperation to save your home. So you pay their hefty upfront fees—and then you have to sign a mountain of documents to get the ball rolling.

The documents include one that signs your deed over to them. But they assure you it’s necessary so they can pay off your mortgage and save your house. Then you can pay them back at a much better rate over time.

Once they have the deed they know how to get a considerably larger mortgage from the bank. They secure this loan, and while it goes unpaid, they may even ask you to pay rent to live in what used to be your home. When they get the larger loan, they pay off your mortgage—then pocket the difference, tens of thousands of dollars. Then they run for the hills, never to be heard from again. What have you lost?

  • Thousands of dollars in upfront fees
  • The rent you paid while the new loan goes unpaid
  • Ultimately, your home (http://www.freddiemac.com/avoidfraud/fraud_schemes.html#rescue)

The warning signs of mortgage fraud

According to the Federal Trade Commission (FTC) there are warning signs that should tip you off that you are about to be scammed. Avoid any “mortgage specialists” who engage in these practices:

  • Guarantee to stop the foreclosure process — no matter what your circumstances.
  • Advise you not to contact your lender, lawyer, or credit or housing counselor.
  • Collect a fee before providing any services.
  • Accept payment only by cashier’s check or wire transfer.
  • Encourage you to lease your home so you can buy it back over time.
  • Tell you to make your mortgage payments directly to their business, rather than to your lender.
  • Advise you to transfer your property deed or title.
  • Offer to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.
  • Offer to fill out paperwork for you.
  • Pressure you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand. (http://www.scambusters.org/foreclosurescams.html)