Beware of Scams
Don‟t be a Victim
COMMON SCAMS
Don‟t be a Victim!
The possibility of losing your home to foreclosure can be terrifying. The reality that scam artists are preying on the vulnerability of desperate homeowners is equally frightening. Many so-called foreclosure ―rescue‖ companies claim they can help you save your home, but in reality they rarely do. Unfortunately, foreclosure fraudsters take your money, can ruin your credit and wipe out any equity you have in your home.
Your mortgage lender – or any HUD-Approved Housing Counseling Agency – can help you find real options to avoid foreclosure, and at no cost. If someone offers to negotiate with your lender and offers to arrange to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation and experience.
Loan modification companies are similar to foreclosure ―rescue‖ firms and are now being marketed aggressively to borrowers who might be experiencing a hardship. In Arizona, they are not licensed or regulated and therefore not necessarily trained, knowledgeable or have the ability to deliver on their promise. Loan modification offers can look legitimate and some even replicate government agency websites or used forged letterhead resembling your lender. Anyone guaranteeing results or charging upfront fees to ―save your home‖ should be suspect. Call your lender directly using the phone number on your mortgage statement and seek free counseling help from a HUD-certified financial counselor.
Sample
RED FLAGS
- guarantees to stop the foreclosure process – no matter what your circumstances
- offers to make your loan more affordable and help you avoid foreclosure
- 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
Sample
How Scams Work
Foreclosure ―rescue‖ firms and loan modification companies are plentiful these days. Their goal is to make a quick profit, they will use half-truths, and outright lies to sell services that promise relief and then fail to deliver.
Potential victims are easy to find. Foreclosure ―rescue‖ professionals use a variety of tactics to find homeowners in distress from foreclosure postings in the newspaper and on the Internet or through public
files at local government offices. Other approaches include ads on the Internet, on television, or in the newspaper, posters on telephone poles and bus stops. They can also send out personalized letters to the homeowners and post signs in the neighborhood.
The scam artists use simple and straight-forward messages, like:
“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 every day. Our team of professionals can stop yours this week!”
In reality, they cannot deliver or guarantee that you will be helped, and should be avoided. They encourage the homeowner to stop working with their lender, servicer and housing counseling agency and tell them they will take care of everything.
If you suspect a scam, contact the Arizona Attorney General’s Office (see ―Tool/Resources‖ section for the contact information).
Common Foreclosure Scams
Phony Counseling or Phantom Help — The ―rescuer‖ tells the borrower that he can negotiate a deal with the servicer to save the house if the borrower pays a fee first. Once the fee is paid, the rescuer takes off with the money and provides no assistance.
Lease or Buy-Back — Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted and the ―rescuer‖ walks off with most or all of the equity.
Bait and Switch — Homeowners believe they are signing documents for a new loan to make the mortgage current, but sign away their home and are left holding the mortgage on a home they no longer own.
Refinance Fraud — Beware of people posing as mortgage brokers or lenders and offering to refinance your loan so you can afford the payments. Con artists may trick you into signing over the ownership of your home by saying that you are signing documents for a new loan.
Bankruptcy Foreclosure — There are several scam attempts to abuse the bankruptcy laws. The bankruptcy process can be complicated and expensive and the results can have a negative effect on your credit for years to come. For example, the ―rescuer‖ may promise to negotiate with the lender or get a refinance on your behalf for an upfront fee. Instead, the scam artist takes the fee and files a bankruptcy case in your name—sometimes without your knowledge.
Equity Stripping — A buyer purchases the home for the amount of the late payments and flips the home for a quick profit.
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New fraudulent scams are continuously developing. Always call a non-profit HUD approved housing counseling agency or your servicer if you suspect an offer is too good or if you are asked to pay a fee for foreclosure prevention services
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How To Protect Yourself From Scams
- DON’T pay money to people who promise to work with your lender to modify your loan. Instead, contact the Arizona Foreclosure Prevention Helpline (1-877-448-1211) for a referral to a HUD Approved Housing Counseling Agency and receive free help.
- DO call your lender yourself. Your lender wants to hear from you and would likely be more willing to work with you than a foreclosure consultant.
- DON’T transfer or sign over the deed to your home as part of a foreclosure avoidance transaction. A deed should be signed over only if you intend to sell the home for a fair price.
- DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he/she promises to pass the payment on.
- DON’T sign any documents without reading and understanding them first, or contracts and documents that have blank spaces. Many homeowners think they are signing documents for a new loan to pay off their mortgage and they discover they have actually transferred ownership to the ―rescuer.
- DO consult an attorney, financial advisor or knowledgeable family member before signing any ―rescue documents.
- DO contact a U.S. Dept. of Housing & Urban Development (HUD) approved housing counseling agency who may be able to help you for no charge. For a referral to a housing counselor near you, call the Arizona Foreclosure Prevention Helpline (1-877-448-1211) or go to www.hud.gov/arizona.
- If it sounds too good to be true, it probably is. Trust your instincts and seek help. Reporting suspicious schemes helps prevent other from becoming victims
IF YOU SUSPECT A SCAM, CONTACT:
Arizona Attorney Generals Office
602-542-5763 / 520-628-6504
Outside Phoenix/Tucson Metro Area 1-800-352-8431
Federal Trade Commission
or call toll-free, 1-877-FTC-HELP (1-877-382-4357);
Better Business Bureau 1-877-291-6222
Fraudulent foreclosure “rescue” professionals use “half-truths” and outright lies to sell services that promise relief and then fail to deliver.
More information on the latest rescue scams and the ways to protect yourself can be found at:
The Arizona Attorney General’s office at www.azag.gov
Don’t Borrow Trouble® Pima County website at www.dbtaz.org
Arizona Foreclosure Prevention Task Force website at www.azforeclosureprevention.org
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This Information was compiled by the Arizona Foreclosure Task Force www.azforeclosureprevention.org
Revised October 19,2009. pages 29-31 of the Arizona Foreclosure Information workbook.
