Many people facing bankruptcy are most terrified about the possibility of losing their home to foreclosure. Before seeking a repayment program in Chapter 13 bankruptcy, a homeowner may seek the assistance of "foreclosure rescue" companies. While not all foreclosure rescue companies are bad, many are scams preying on the vulnerability of desperate homeowners. Many so-called foreclosure rescue companies or foreclosure assistance firms claim they can help you save your home. Some are brazen enough to offer a money-back guarantee. Unfortunately, once most of these foreclosure fraudsters take your money, they leave you much the worse for wear.
The Federal Trade Commission stated in a recent article that,
"Fraudulent foreclosure "rescue" professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it's too late to save your home, they take the property or siphon off the equity. You've lost your home to foreclosure despite your best intentions."MARKETING TO TERRIFIED HOMEOWNERS
While there are legitimate options to save your home, the FTC warns that such scammers are sometimes easy to recognize, sending direct mail to the delinquent home owner or posting ads on the internet, newspapers, or even TV. Such promises as,
"Stop Foreclosure Now!" "We guarantee to stop your foreclosure." "Keep Your Home. We know your home is scheduled to be sold. No Problem!" "We have special relationships within many banks that can speed up case approvals." "We Can Save Your Home. Guaranteed. Free Consultation" "We stop foreclosures everyday. Our team of professionals can stop yours this week!"GETTING YOU TO PAY FOR SERVICES
Once they have your attention, they use a variety of tactics to get your money:
1. They say they have "special" relationships with your lender(s) and can negotiate a modification if you just pay a fee first. As the FTC states, "You may be told not to contact your lender, lawyer, or credit counselor, and to let the scam artist handle all the details."
2. The rescue specialist may insist that all mortgage payments be made to them, payments your lender may never see and for which you may never get credit.
3. The scammers may have you sign documents, and as most people sign documents without reading based on a person of authority telling them to do so, you may sign over your deed among those documents.
4. The biggest scam is when the rescue specialist tell you surrender title to your home, and that they'll rent it back to you on a "rent to buy" option. The FTC says of this scam that, "the terms of these deals usually are so burdensome that buying back your home becomes impossible. You lose the home, and the scam artist walks off with all or most of your home's equity. Worse yet, when the new borrower defaults on the loan, you're evicted."
BANKRUPTCY FORECLOSURE
The FTC has said that the really blatant foreclosure rescue scam artists, "may promise to negotiate with your lender or to get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, though, the scam artist pockets the fee and files a bankruptcy case in your name - sometimes without your knowledge." Since you have no notice of the filing, you miss the first meeting of creditors and your case is dismissed. Its bought the scammers more time, and likely more payments from you.
LEGITIMATE HELP
The FTC advised that if you're having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately. Other foreclosure prevention options, including reinstatement and forbearance, are explained in Mortgage Payments Sending You Reeling? Here's What to Do, a publication from the FTC. Find it at www.ftc.gov
The FTC also advises that you contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure.
If you are seeking foreclosure help, avoid any company that guarantees to stop the foreclosure process, instructs you not to contact your lender, lawyer, or credit or housing counselor, or collects a fee before providing you with any services and accepts payment only by cashier's check or wire transfer. Also avoid any person that wants to lease your home back to you, tells you to pay your mortgage payments to them, instead of 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 may not be current market value - or pressures you to sign paperwork you haven't had a chance to read thoroughly or that you don't understand.
If you think you've dealt with a scammer, contact the Federal Trade Commission, or your state's Attorney General.
