Avoiding Foreclosure Rescue Scams

As it is in any industry, there is always a group of bad apples lurking just below the surface, waiting to take advantage of the unaware and misinformed consumer. One of the largest industries where these scam-artists prey is in foreclosure. When people are facing foreclosure, their desire for hope can sometimes lead them to believe almost anything or anyone who claims they can help them get out of their dire situation. This is when scam-artists can strike.

As a former consumer fraud investigator for the National Consumer Law Center in Boston, Steve Tripoli found that foreclosure rescue scams fell into three categories.

3 Types of Foreclosure Rescue Scams

• Phantom help: The "rescuer" charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.
• The bailout: In this scam, the homeowner is deceived into signing over the title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the "rescuer" walks off with most or all of the equity.
• The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don't even know they've been scammed until they're evicted

(Source: Bankrate)

The best way that a consumer can equip themselves to avoid these scams is to educate themselves on the most efficient methods of prevention.  Below are 7 ways that a consumer can avoid foreclosure scams.

7 Ways a Consumer can Avoid Foreclosure Scams

• Don't panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
• Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
• Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
• Never make your mortgage payments to anyone other than your lender. If you can't pay, do not ignore warning letters from your lender; contact them instead.
• Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
• Don't sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
• If you do not speak English, never use a "rescuer's" translator. Instead, insist on using your own translator.

(Source: Bankrate)

The best way to avoid these foreclosure scams is to avoid foreclosure altogether.  However, if you find yourself in a foreclosure situation that is unavoidable, educate yourself as mush as possible so you do not end up on the wrong end of a foreclosure scam.