As if mortgage fraud was not bad enough, this market brings a whole new host of problems. Real Estate Scam Artists are luring already hurting homeowners into all sorts of murky waters. Use caution and keep a watchful eye on those claiming they can save a home from foreclosure. If it sounds to good to be true, then it probably is!
Agents, you should beware of the "slick crooks" looking to use you and your services as a middleman to lure Sellers to their trap. The savvy cons will pose as an "Investor" or "Buyer" and use you to locate their prey. If you are asked to participate or are participating in any of these scams... BEWARE!
COMMON FORECLOSURE SCAMS:
1. EQUITY SKIMMING:
You are approached by a "buyer" that offers to buy your home at full asking price. The potential buyer claims he will solve all your financial problems by "promising" to pay off your mortgage. He claims to take over the existing mortgage and give you a sum of money after the property is sold. But in order to do so, he suggests that you move out right away and deed the property over to him. So you move out and assume the "buyer" will continue to make the mortgage payments. However, the "buyer" collects rent for the next 6 - 8 months and does not make any mortgage payments. The lender has no choice but to foreclose and all the while you have no idea what's happening because you've moved out.
2. THE BAIT-AND-SWITCH:
Very similar to taking over "subject to", but the acclaimed buyer is only after the equity. The buyer tells the homeowners he will bring the mortgage current and tells them they can stay in the home. But in order to do so, he must have a few documents signed that protect his interest and gives him ownership of the property. Then a few weeks down the road, the homeowner receives an eviction notice.
3. THE BAILOUT:
Again very similar to the previous two, where the homeowners sign over the deed with the assumption that they will be able to remain in the house as a renter or lease it back from the buyer and eventually buy it back over time. The terms of these types of scams are so harsh that they make it nearly impossible to buy-back which was the plan to begin with. The homeowner is left with nothing and the buyer walks off with most or all of the equity.
4. PHANTOM ASSISTANCE:
Typically these are online companies claiming to have the magic touch in stopping the foreclosure auction. They know all the ins and outs and what to say to the lender to stop the auction. Then these companies charge outrageous fees for simple phone calls and paperwork the homeowner could have completed themselves.
5. COUNSELING AGENCIES:
Some groups, most of them online, calling themselves "counseling agencies" may approach you or ask you to submit your information for a personal consultation to review your situation. They then proceed to offer certain services for a fee. Most of the time these "special services" you are paying for are FREE, such as negotiating a new payment plan with your lender, working out a forbearance, or lowering your interest rate. These are all things your lender will assist you with at no charge. Be careful giving ANYONE money online that claims they can assist you out of foreclosure. There are dozens of good, non-profit organizations and free counseling agencies that are ready and willing to assist.
6. SHORT SALE COMPANIES.
This is the newest breed of companies to avoid. Here is the bottom line, they make all their money from the fees you pay them at the start of the process. In other words, they have little to no incentive to get your short sale actually accepted and closed.
NOT A SCAM: One of the largest foreclosure assistance programs right now is
888-995-HOPE. This is available to any homeowner in America having trouble paying their mortgage. It is provided free of charge by the Home Ownership Preservation Foundation, a nonprofit group dedicated to preserving Home Ownership.
While there are legitimate buyers and options for homeowners who find themselves in financial distress, you should always use caution. Ask questions and verify the answers. If you are in doubt, contact your mortgage holder, an attorney, an accountant or a real estate professional. Here are a few things you can do to avoid foreclosure scams:
* DON'T SIGN any papers that you don't fully understand, or matters could get worse.
* DON'T SIGN any papers that you feel pressured into signing. Take your time.
* DON'T MAKE mortgage payments to anyone other than your lender.
* DON'T SIGN over the deed without some closure or agreement for your protection. Talk to your attorney or title company if you need help.
* DON'T EVER pay anyone who claims to stop foreclosure. You can stop the auction yourself.
Visit my website for additional information or call me direct to ask questions. I am the Broker of Vision Real Estate with a Team that specializes in helping distressed homeowners. I am happy to discuss your situation and I can help. You are under no obligation, but you may have alot to lose...don't wait until it's too late.