With all the talk about mortgages resetting and people losing their homes to foreclosure, there has also been a corresponding rise in foreclosure scams across the country. The Boise real estate market hasn't been hit the way many parts of the nation have, but there has been an increase in the number of "questionable" practices seen in the Treasure Valley. Should the economic slowdown that many are predicting come to pass, we'll no doubt see even more of this kind of activity.
Foreclosure scams can target either side of the foreclosure equation, aiming for naive buyers looking for that impossibly great deal, as well as the scams targeting those in danger of losing their homes. My hint for avoiding the first kind of scam is to simply ignore the TV info-mercials, the newsletters and websites, and the "get the secret list of foreclosures your Realtor and bank don't want you to see" emails. You won't get rich with any of those, and in fact, you might find yourself on one of those lists yourself if you follow some of that advice.
For the homeowner trying to avoid foreclosure, the most common foreclosure scams are phoney "rescue" schemes. And if you think this is something new, here is a quote from the Better Business Bureau, from an article dated 2003 (before the boom and before the subprime mess).
"The fraudulent operators may promise to take care of your problem with your mortgage lender or to obtain refinancing for you. Sometimes they also ask you make mortgage payments directly to them. They have even been known to ask the homeowner to hand over their property deed, claiming that if the homeowner then makes the mortgage payments to them, they will be able to in stay in their home. Instead of contacting your lender or refinancing your loan, the con artist pockets all the money you paid, and then files a bankruptcy case in your name - sometimes without your knowledge."
Bankruptcy scams and foreclosure rescue scams have been around forever, certainly much longer than the current real estate market slowdown. So, how can you avoid the scams, and what should you watch out for? Here are some tips
- Don't be afraid to stay in contact with your lender. Work WITH them.
- Before signing anything that purports to be a rescue plan, get competent advice, either from your lender or a lawyer.
- Never sign anything with blank spaces or unfilled lines.
- Never make house payments to anyone or any company other than your lender.
- Never sign a quitclaim, or any sales contract that promises to "lease back" your home.
Foreclosures and bankruptcies are serious business, and they are one area of life that isn't easy and you need professional help. Avoid anyone who tells you otherwise... they don't have YOUR best interests at heart.
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Interested in a short piece about a woman who took her foreclosure into her own hands, and tried to sell her house off piece by piece on eBay? I wrote a few more comments about this subject on Our Meridian Blog.
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