If you are at risk of foreclosure then you are at a certain level of vulnerability. And where ever there is vulnerability, scam artists and other less than trustworthy opportunists will be right around the corner. Whether it is an annoying telemarketer or a late night infomercial, self-proclaimed experts are trying to sell you on a one size fits all foreclosure solution to anyone that will listen. It is imperative that you evaluate the pros and cons of every solution that comes your way before taking action or signing any binding documentation. See your lender, loss mitigation or even your loan officer for counseling on the best solution to avoid foreclosure. If you are considering selling your property it is in your best interest to get at least three local agents from different offices to do a Comparative Market Analysis on your home. It's a free service, and you'll have a good idea of the value of the home.

Here are some of the many foreclosure "solutions" to look out for:

1. "We'll save your credit. Pay us a fee and sign the house over to us. The foreclosure will be recorded against us, not you."
As ridiculous as this may sound, there have been some unlucky homeowners that have fallen victim to this scam. Indeed, when you're home is on the brink of foreclosure and there is a sense of urgency to take action right away, your better judgement may be impaired. So just keep in mind that signing over your house to another party does not get you off the hook; foreclosure will be reported against the borrowers on the note, not anyone else.

2. "We'll give you some money, just sign the house over, we'll cure the default."
Now here is where things get interesting; this can be the solution that you are looking for IF you know how much equity you are selling, and IF the purchaser really will cure the default, and IF the purchaser will really make the payments, and IF you want to still be responsible for the loan. With all of those IFs this may not be your best option. However, you can always speak to your loan officer, lender, loss mitigation, or other forms of foreclosure prevention counseling to see if this could be your solution or if you'd be better off with an alternative solution.

3. "We'll buy the property, lease it to you, you have the option to buy it back."
Ideally, this is a great solution. But in reality, to buy back your home you'll need a new loan that's larger than the loan you have with an interest rate greater than what you have. Your payments will be higher and you're not guaranteed to qualify. Explore alternatives like a small hard money loan if you have the equity, or consider an open market sale. You will probably end up with more money in your pocket.

4. "We'll get you a new loan and solve all these difficulties."
Unless you are paying fees out of pocket, every time you refinance your loan balance goes up, and that uses up your equity. Shady lenders can make a lot of money churning loans over and over again. You need to consider total loan amounts also, not just the monthly payments. Try to solve the problem instead of just extending the time frame.

5. "I'm an agent specializing in pre-foreclosures and I'll get your property sold quickly for top dollar."
Some agents have a relationship with an investor and work from published Default notices. You'll get an offer, but is this really the best offer out there? We've seen listed properties in foreclosure receive higher offers with no contingencies and the capability for quick closing that aren't always accepted by sellers. Why? Because in most cases they are never presented to the seller. Use local agents; get a Comparative Market Analysis from at least three local agents and be cautious.

6. "Stop Foreclosure, file for Bankruptcy."
Bankruptcy does NOT STOP foreclosure. It puts a hold on foreclosure, which can allow you time to reorganize your finances. Bankruptcy will also leave a less than admirable blemish on your credit record. Every area has reputable attorneys who handle bankruptcies. Spend the time to find one and spend the time to know what you have to do and when. Be wary though, any mistake can cause things to get very bad very fast. Think of bankruptcy as your last resort, not as an easy cop-out.

Leo Namiot

Benchmark Mortgage Connecticut

www.BenchmarkCT.com