How To Avoid Foreclosure Scams: Be Careful With Those Offering Foreclosure Help

If you are facing a potential foreclosure, then you are in a tough situation. But you are not alone. As the interest rates increase and home appreciation decreases, many homeowners are having trouble hanging on to their homes.

And there is an abundance of people banking on the desperation that this causes.  You may have noticed advertisements popping up for help avoiding foreclosure.  Are they legit? 

First of all, no matter what your condition, you should always treat any offer of assistance with caution.  A lot of cons use "helping" as a way to scam struggling homeowners out of their equity.  You can lose the money you have in your home and even your home too. 

Mortgage foreclosure rescues come in different types.  You may be loaned money by the rescuer with the purpose of paying off the mortgage that is coping with foreclosure.  You will be asked to sign a agreement of loan, but it isn't what it appears.  You are instead transferring all of your interest in the property to the rescuer.  You are then evicted from the house. 

Sometimes, the homeowner even knows that he's signing over the title to the property.  In this case the rescuer would pay off the property and the homeowner agrees to lease the home and continue to live there until he is back to normal financially.  However, the lease payments on the home will become larger than the mortgage payments.  This will make the victim fall behind and is evicted.  If the victim doesn't fall behind, the rescuer will set the price of the home so high that it can't be repurchased.  It’s like a trap to force you to lose your home and have to end up giving it to the rescuer. 

The main problem is that many homeowners believe that if they are foreclosed on, they lose everything.  Even if you lose your home to the lender, you might still receive money for it.  The lender will only take any mortgage not paid and related fees out of the sale price of the property.  The rest is your equity and will be paid to you.  If you sign over your property to someone else, they will obtain the proceeds from the sale. 

How do you identify and avoid foreclosure scams? 

1.   Ignore any signs or bulletin board notes that offer foreclosure help.  If they're advertising on the windshield of your car, chances are they possibly aren't legit. 

2.   Don't give out any information to anyone who contacts you wanting to help.  Cons regularly check the public foreclosure notices for potential targets.  They're betting that you are desperate to find a way out of your situation. 

3.   Read every single document, front and back.  If an offer is too good to be true, it possibly is.  If someone says that you won't get any money after your home is sold, don't trust them.  There is often a very good chance that you will.  For a few hundred dollars, it is better if you have an attorney accompany you to read through every document that you're expected to sign.  In addition, look out for documents with blanks and empty spaces. 

4.   Check out any company you're considering that turning to with the Better Business Bureau and the Real Estate Commission in your state You may even want to contact the state attorney general's office to see if there are any open investigations of the company or its owners.