The Foreclosure Scam Survival Guide
Guest Blogger: Kristin Hutchins
Remember, if it sounds to good to be true, it usually is and probably illegal.
The latest mortgage scam sends letters to homeowners claiming to be affiliated with the federal government promising that they could help homeowners arrange a mortgage loan modification for little or no cost. All they had to do was send their monthly mortgage payment directly to their mortgage modification consultants instead of their lender. They were told these funds would be held in a reserve account while they negotiated with your lender.
Instead the funds were used to cover the scammers expenses including buying cars and jewelry. Unfortunately instead of being helped, many of the homeowners found their mortgage in default. In this scam 400 homeowners in San Diego County lost a total of $1.5 million in two years before the scam was uncovered.
Here are five tips to help you avoid becoming a victim:
Never pay upfront fees. Foreclosure consultants are prohibited by law from collecting money before services are preformed.
Be sure to read the letters from your lender. Some lenders are sending letters to mortgage holders that may be elegible for a loan modification or principal reductions under the terms of the national mortgage settlement. Only your lender can help you file a claim for assistance.
When searching for foreclosure solutions don’t transfer title or sell your home to anyone claiming to be able to bring it out of foreclosure by allowing you to stay in the home as a renter and purchasing it back in the future. This scheme generally includes a fraudulent bankruptcy filling and the scammer taking possession of the home and evicting the homeowner.
Don’t make mortgage payments to anyone other than your lender without the lenders approval. Scammers generally keep the money while your mortgage ends in default.
Don’t sign any documents without first reading them. Many times you are falsely led to believe that you are signing documents for a loan modification or principal reduction. To find out later that you actually transferred ownership to someone now trying to evict you.
To make sure you and your home are protected, the FBI provides a website with information and resources on various mortgage scams, how to spot them, and tips on how you can ensure you’re prepared! We want everyone in affordable homes and also completely aware of all of the scams to stay far far away from.