People find themselves deeply in debt for a number of reasons. Some have been downsized at work, while others have suffered an injury that leaves them disabled and unable to work. Before they know it, creditors are calling all the time and they stress about how they will be able to pay their bills and keep their home from being foreclosed upon. In times like these, people can get desperate, making them a perfect target for unscrupulous scammers who are willing to take advantage of people in their time of need.
Many scammers advertise on the Internet, but some are more aggressive, sending mail, leaving flyers or even calling when they see that a foreclosure may be imminent. They use deceptive phrases like “You qualify for a loan modification!” or “We guarantee you we can stop foreclosure.” As with most things in life, if it sounds too good to be true, it usually is.
Often, these scammers will ask for a fee in advance, saying that they will save your home or negotiate a lower mortgage payment for you. Others may tell you that you can give up your home, but continue living there as a renter. They claim you will be able to buy your house back later, but they either raise the rent so high that you’re forced to move out or they set the sales price so high that you can’t afford it.
Many will instruct you not to contact an attorney and this is a complete fallacy. In fact, when you’re facing foreclosure, a foreclosure attorney is one of the only professionals who may be able to halt foreclosure proceedings or file for a type of bankruptcy that would let you keep your home.
How These Scams Work
Phantom Help or Phony Counseling
The fraudster will tell you that they will save your home or reduce your mortgage payments by negotiating a deal with your lender. In return, they will ask for an upfront fee.
The moment you pay, they will take off with your money. In some cases, the phony counselor may ask you to directly make your mortgage payment to their account while they negotiate with your lender. After collecting one or more monthly payments, they will disappear.
Posing as Forensic Auditors
Posing as a foreclosure prevention auditor or forensic loan auditor, the con artist will offer to review your mortgage documents to assess whether the lender complied with the law. They will ask for an upfront fee, and once you pay, they will stop returning your calls.
The scam artists may also use rent-to-buy schemes or bait-and-switch to swindle you off your money.