To wrap up National Consumer Protection Week, today we’re going to cover how to avoid a mortgage modification or foreclosure scam.
You may see different kinds of advertising about refinancing an existing home with temptations of low rates and payments. This advertising can come from self-proclaimed mortgage or foreclosure consultants that purchase lists of distressed borrowers or public notices and they will promise to rescue or prevent foreclosures through e-mail, phone calls or even in person. These are salesmen that are trained to convince and persuade you that their solutions will solve your financial problems. Here are certain tactics to look for in a common mortgage modification or foreclosure scam.
As sourced by the Comptroller of the Currency Administrator of National Banks:
Signs of Mortgage Modification & Foreclosure Scams
- Refinance Fraud and Foreclosure Rescue. Scam artists often offer to act as intermediaries between homeowners and lenders to negotiate payments. They tell you if you make your directly to them, they can forward payments to your lender. But in many cases, they may pocket your money and leave you in worse shape than when you started.
- Fake government programs. Scammers create similar looking websites used by government agencies. Look for words like “federal” or “TARP”(Troubled Asset Relief Program). Do not let these abbreviations commonly associated with official government programs trick you into thinking they are approved by, or affiliated with the federal government.
- Leaseback and rent-to-buy schemes. Swindlers may persuade you to transfer the title of your home to them with promises of new and better financing. They convince you to rent your home and eventually buy it back. But, if you do not comply with the terms of the rent-to-buy agreement, you can lose your money and your home. In reality, the schemers have no intention of ever selling your home back to you. They will take your home and money, requiring you to seek more help with debt relief.
- Bankruptcy scams. Con artists will tell you bankruptcy will solve your foreclosure problems. But filing for bankruptcy is almost never a permanent solution to prevent foreclosure. Filing for bankruptcy brings an “automatic stay” into effect that stops any collection and foreclosure action while the bankruptcy court administers the case. At some point, you must make payments on your mortgage or the lender has the right to foreclose. Bankruptcy also will lower your credit score and remains on your credit report for 10 years.
- Debt-elimination schemes. Crooks use illegitimate legal arguments to convince you that they can “eliminate” your debt and that you no longer have to pay back your mortgage. They lie about applicable laws and finance, such as “secret laws” that allow you to erase your debts.
If a difficult financial situation is putting you at risk of a foreclosure, remember that you should always contact your lender first. They have agents in the loss-mitigation department about mortgage modification options and other ways to avoid foreclosure. In addition, American Consumer Credit Counseling’s certified housing specialists have the resources to help and educate you about the process, and options available to prevent foreclosure.
ACCC’S HOUSING COUNSELORS WILL EDUCATE YOU ON:
- Consequences of foreclosure
- Possible repayment plans
- Forbearance agreement
- Loan modifications
- Refinancing options
- Possible sale of your home
- Pre-foreclosure sales
- Deed in lieu of foreclosure
The moral of the story is that if it seems to good to be true, it probably is. Mailers, telemarketers and even door to door salesmen that have information about your mortgage and your lender may not be from your lender at all, but rather from another company that wants your money. Unfortunately nowadays companies can legally get your information from public records. Before you respond to any offer, review it carefully to make sure you know who you’re dealing with.
For more information or to speak with a housing counselor call 1-866-826-7180