The Federal Trade Commission has issued an advisory to consumers that identified the red flags that warn you of a possible foreclosure rescue scam:
If you’re looking for foreclosure prevention help, avoid any business that:
- guarantees to stop the foreclosure process – no matter what your circumstances
- instructs you not to contact your lender, lawyer, or credit or housing counselor
- collects a fee before providing you with any services
- accepts payment only by cashier’s check or wire transfer
- encourages you to lease your home so you can buy it back over time
- tells you to make your mortgage payments directly to it, rather than your lender
- tells you to transfer your property deed or title to it
- offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
- offers to fill out paperwork for you
- pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.
If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately.
The report also identified several types of foreclosure rescue scams:
- Phony Counseling or Phantom Help – where the scammer pockets a fee but performs no services
- Bait-and-Switch – where the scammer asks you to sign “loan documents” that really surrender possession of your home
- Rent-to-Buy Scheme – where the scammer takes legal title to your home, with a promise to sell it back to you, and then makes it difficult or impossible for you to meet all the terms of the repurchase
- Bankruptcy Foreclosure – like the “phantom counselor,” this scammer promises to file bankruptcy for the homeowner, but pockets the fee and disappears
If you think you’ve been a victim of any of these scams, contact the Federal Trade Commission or your state Attorney General’s office. You also may want to speak with a lawyer who can act to represent your interests, first.
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