Sellers Beware of Short Sale, Loan Modification and Foreclosure Rescue Scams

By
Real Estate Agent with Michael Saunders & Company

Sellers Beware of Short Sale, Loan Modification and Foreclosure Rescue Scams

The age old adage "buyer beware" has been turned upside down in all over the country, but especially in Florida.  These days it's "seller beware".  For the many thousands of homeowners who find themselves upside down in their mortgages and unable to either keep up their payments or sell their homes, the scammers have come out en mass as "loan modification specialists", "home savers" and other creative titles to try and trick you out of your money and, in the worst cases, your home!  Please read below for some of the most frequently asked questions regarding these kinds of scams and how to protect yourself from falling prey to them.

Frequently Asked Questions (provided by MyFloridaLegal.com)

  • What is a Foreclosure "Rescue" Scam?
  • How do I know whether a foreclosure modification company is legitimate?
  • Do I need to stop paying my mortgage in order to qualify for a loan modification?
  • I paid money to a company several months ago and now they are no longer answering their phones or responding to my emails. What should I do?
  • I negotiated a loan modification with a company in California and paid an up-front fee for its service. I was reading about the companies in Florida which are being sued for charging these fees. Does the Florida law only apply to Florida companies?
  • I am not a Florida resident and a Florida foreclosure rescue company is attempting to charge me an up-front fee. The company told me that the new law only applies to Florida residents, and they can charge out-of-state residents an upfront fee. Is this correct?
  • I received a flyer in the mail or a telephone call from a company that sounded like it was affiliated with the government. What should I do?
  • I am attempting to do a loan modification with a licensed Florida mortgage broker. He says he can charge me an application fee under Florida law. Is this correct?
  • I have been told by the loan modification company that the fee it is charging is for a forensic audit. Is this legal?

 

What is a Foreclosure "Rescue" Scam?
Simply put - foreclosure rescue fraud happens when a company or person promises to help save your home from foreclosure, but is actually intent on stealing your home, most of the equity you have accumulated in your home, or a substantial amount of money.
There are several types of Foreclosure Rescue Scams you should be aware of:

  •  
    • Foreclosure Prevention Specialist - these are phony foreclosure counselors who may try to collect large sums of money but rarely provide any services.
    • Phantom Help - individuals who charge high fees for work the homeowner could do his or herself.
    • Lease/Buy Back - homeowners are deceived into signing over the deed to their homes.
    • False Bailout - the homeowner is led to believe that he or she can rent his or her home from the new owners and eventually repurchase the home.
    • Bait and Switch - the homeowner thinks he or she is signing new mortgage documents, but is actually signing over the deed to their home.

How do I know whether a foreclosure modification company is legitimate?
You should avoid any company that asks you to pay an up-front fee for its services, no matter what that fee is called. You should also avoid any company that promises you that it can save your home or get you a reduced mortgage interest rate. You can call the Attorney General Hotline at 1-866-966-7226 and check to see if there are any complaints.

Do I need to stop paying my mortgage in order to qualify for a loan modification?
No. Avoid any company that instructs you to stop paying your mortgage.

I paid money to a company several months ago and now they are no longer answering their phones or responding to my emails. What should I do?
You should always attempt to negotiate with your original lender first, and you should re-contact them if you still need assistance. You should also file a complaint with the Attorney General's Office.

I negotiated a loan modification with a company in California and paid an up-front fee for its service. I was reading about the companies in Florida which are being sued for charging these fees. Does the Florida law only apply to Florida companies?
No. The statute applies to ALL companies, regardless of where they are located, if they are assisting a consumer who owns real property in the State of Florida or if the companies are located in Florida.

I am not a Florida resident and a Florida foreclosure rescue company is attempting to charge me an up-front fee. The company told me that the new law only applies to Florida residents, and they can charge out-of-state residents an upfront fee. Is this correct?
No. The law applies to any company doing business in Florida.

I received a flyer in the mail or a telephone call from a company that sounded like it was affiliated with the government. What should I do?
Do not respond to any solicitation, either by mail or by telephone, which does not come from someone you already know and trust. These types of solicitations usually are from private, for-profit companies which are only looking to make money.

I am attempting to do a loan modification with a licensed Florida mortgage broker. He says he can charge me an application fee under Florida law. Is this correct?
No. The Office of Financial Regulation has stated that loan modifications are not governed under their regulatory statutes. Consequently, even Florida licensed mortgage brokers are governed by Florida Statute 501.1377 and may not charge an application fee or any other upfront fee directly or indirectly.

I have been told by the loan modification company that the fee it is charging is for a forensic audit. Is this legal?
No. Loan modification companies cannot charge any fee or secure payment for any service that has not been completed.

Don't let yourself fall prey to these scam artists.  Remember, if it sounds too good to be true, it very well probably is.  If the professional wants a large sum of money upfront, investigate them; see how long they have been in business by using www.Sunbiz.org and check the status of their license and make sure there are no complaints (www.MyFlorida.com is good for this).  Are they an attorney?  A Real Estate Professional?  What did they do to earn their living before the this outbreak of Short Sales and Foreclosures? Hint: if it wasn't Real Estate Law or Real Estate Brokerage, that smells like an Opportunist, not a Professional.

If your property is even ONE payment behind, you need to find a professional who is truly out to help you navigate this tough time.  If you intend to KEEP the home, you can likely try and work out a modification on your own.  If you just can't keep the home, give us a call, we are here to help you market, sell and CLOSE West Coast Florida Short Sale Property.   We are Licensed Real Estate Agents that are specially trained in Short Sale and Foreclosure Homes.  We only get paid when the property SELLS, and that comes out of the proceeds to the lender from the sale, not your pocket!  

For more information on how we can assist you with buying a short sale home, or listing your homes as a short sale, please contact the Foster-Probert team at (941) 812-7634, or email us at: jospehfoster@michaelsaunders.com

Comments (0)