Mortgage Foreclosure Rescue Scams

Someone knocks on your door and represents himself as an attorney who can negotiate a deal with your lender to save your house. He hands you a business card with the name of the law firm. But before he can do anything to help you, you have to pay him a fee. This person knows your name, your lender, and the fact that your home is in danger of foreclosure. You’re unsure about this so you call the law firm at the number on the business card to verify it. The law firm thanks you for calling and says there has been someone going around the community misrepresenting themselves as being with the firm. But the “law firm” is in on the deal and text messages the fellow to call off the deal and leave. You were lucky. You were targeted for the scam, but managed to avoid it. The information the scammer used to make the deal seem believable is all available as a public record in foreclosure notices in newspapers, on the Internet, or at local government offices. This is known as the Phantom Help scheme, one of several types of scams going on to purportedly rescue desperate homeowners from mortgage foreclosure. In addition to paying the fee, you were told there was no need to contact your lender, lawyer, or credit counselor. The scammer will take care of all the details on your behalf. Just send the mortgage payments directly to him while he negotiates with the lender. That’s money you’ll never see again and neither will the lender. Bait and Switch. You’re told you’re signing documents for a new loan to make your mortgage current. In fact, you’ve surrendered the ownership of the house to the scammer in exchange for a “rescue” loan. Rent-to-Buy. If you surrender title to the house, you can stay there as a renter and buy it back in the next few years. Surrendering the title allows someone else with a better credit rating to secure new financing. The catch? The terms of these deals usually are so burdensome that buying it back becomes impossible. You lose the home and the scammer walks off with all or most of your home equity. Red Flags to watch for if you’re looking for foreclosure prevention help, avoid any business that:

• guarantees to stop the foreclosure process—no matter what your circumstances;
• instructs you not to contact your lender, lawyer, or credit or housing counselor;
• collects a fee before providing you with any services;
• accepts payment only by cashier’s check or wire transfer;
• encourages you to lease your home so you can buy it back over time;
• tells you to make your mortgage payments directly to it, rather than your lender; tells you to transfer your property deed or title to it;
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale;
• offers to fill out paperwork for you; or
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

Where to find help: If you are having difficulty making mortgage payments or have received a foreclosure notice, contact your mortgage servicer immediately or seek help with a mortgage counseling agency. In Pennsylvania, you may get help from the Homeowners Emergency Mortgage Assistance Program (HEMAP) http://www.phfa.org/consumers/homeowners/hemap.aspx. You can also find help at http://www.995hope.org Whatever you do, don’t wait until the last minute. For more information, go to:

• www.ftc.gov
• http://www.attorneygeneral.gov Look for the Consumer tab and choose Advisories.
• http://www.justice.gov/ust/eo/public_affairs/factsheet/docs/fs06.htm
• http://www.freddiemac.com/avoidfraud/fraud_schemes.html