Part 5:
Foreclosure Scams:
How to Avoid Them

Are you a homeowner who is facing foreclosure?  If you are, you may feel desperate.  You may try anything to save your home.  Of course, you do need to do whatever you can, but it is important to not let desperation get in the way.  Homeowners who do often find themselves the victims of a foreclosure scam.

When it comes to foreclosure scams, the best way to protect yourself is to know what to look for.  Although foreclosure scams come in a number of different formats, many are easy to spot.

One type of scam that you will be on the lookout for is when an individual or a company approaches you offering to help.  When doing so, they will offer to provide you with a loan.  The only problem is that a loan is not what you may be getting.  The documents you sign may actually turn over ownership to the individual or company in question.  However, you often end up agreeing to rent the property from them at a very high rate.  When you cannot afford to make those payments, you will be evicted from a home that you no longer own.

So for clarity, with this scam someone tells you they're giving you a loan to help you save your house, but in reality it is not a loan.  The payments you're making to them are actually rent because you've unintentionally given them ownership of your house.  And they are very high payments and the scammers know you may not be able to afford them, so when you're unable to, they'll kick you out of your own house so they can sell it.

Another foreclosure scam involves having an individual or company coming to your rescue.  They will offer to negotiate with your lender for you.  During this period, you are asked to pay the individual or company in question, which may be referred to as a rescuer.  The only problem is that individual or company isn't in contact with your mortgage lender at all.  What they are doing is pocketing your money and you will still end up facing foreclosure.

Now, keep in mind, a real estate investor who is legitimately trying to help you will need to be in contact with your mortgage lender in order to help you.  So don't think that because the investor is asking for your mortgage information that they are trying to pull this scam.  So how do you know the difference?

The difference is that the scammers will be asking you for money.  A real estate investor will typically not charge you a fee for their help.  Obviously they have to make money somewhere or there would be no reason for them to get involved.  But their intention is to buy your house, so they'll make their money after they buy the house from you and sell it.

Similar to the foreclosure scam listed above is one that involves strong-arming your home from you.  In this aspect, the individual or company in question isn't necessarily after your money, but more your property.  They will instruct you not to contact anyone for help, aside from them.  You are instructed not to speak with a lawyer, not to talk to or make payments to your mortgage company, and so forth.  Right before the foreclosure proceedings start, the scammer will then take every step possible to get your home.

They basically make you waste the precious time before the foreclosure, when time is of the essence and you have a small window of opportunity to save your house.  They tell you they're working in your behalf when, in fact, they're doing nothing but letting the clock tick so that you run out of options and become even more desperate so they can take your house from you.

You have the right and responsibility to know what's going on with your house.  It's your house and your name and credit on the line if you lose your house to foreclosure.  You can't afford to let someone bully you into thinking it's none of your business.  Usually a legitimate real estate investor will be open with you about what's going on and what they're doing.  It's your right to know.

One mistake that you will not want to make, concerning foreclosure scams, is believing that the individual in front of you is different because they seem nice.  You've probably heard the term "con man" or "con artist" before.  You may or may not know this, but "con" is short for "confidence.  So a con artist is someone who gains the confidence of another person and then exploits it to their advantage.  Often they gain a person's confidence by smiling and being friendly and charming.  Their goal is to make you think, 'this person could never do anything like that.'  So the reality is that you just never know who might be up to no good by looking at them.  You have to put emotions aside and go with the facts and be sure to get things in writing.

Desperation and despair can cloud one's judgment.  If you are presented with a contract or legal document to sign, do not do so without reading it.  If someone is trying to pressure you into signing without reading it, be especially cautious.  If something doesn't sound right or you're not clear on something, have it reviewed by an attorney.  Be sure to choose your own attorney.  Do not rely on the advice of an attorney suggested to you, as they may be in on the scam, if they are even a real attorney to begin with.

Now, just because you get a referral to a particular attorney doesn't mean the person is scamming you because a legitimate, experienced real estate investor or other professional may make a recommendation.  There are good attorneys and bad attorneys.  Just because they have their name on a piece of paper on the wall doesn't mean they always know what they're talking about.  Some attorneys are not very experienced with creative real estate solutions and may give bad advice or completely wrong information, simply because they don't have experience in that area.

Often, an experienced real estate investor will have dealt with some of the different attorneys in the area and may have found a good one who actually knows what they're talking about.  So don't be alarmed if you're given a recommendation for an attorney.  But a recommendation is different than being pushy and telling you not to talk to anyone except this one person, or not to talk to anyone at all.

As you can see, you have to exercise a certain amount of caution, and scam artists often imitate what legitimate businesses do.  But if you look carefully, you can usually see the signs that will let you know when something fishy is going on.  Just pay attention and don't jump into something based on emotions or without really thinking about it or without reading what you're signing.

The three foreclosure scams mentioned above are just a few that you may run into, but they do have the potential to cause the most damage and the most heartbreak.  The good news is you now know what to look for.  This means you can avoid falling victim to these types of scams.

As a recap, foreclosure scams are out there.  But if you know what to watch out for, you can avoid being taken advantage of.  If you're facing foreclosure, you're in a very uncomfortable situation and you do need to act quickly to get help.

Realize that if you're starting to feel desperate you may not always be thinking clearly and there are people out there who are looking to prey on people in that state.  It may not be easy, but try to be rational and be sure of what you're getting into before you sign.

If you exercise caution, but at the same time are cooperative with people who are sincerely trying to help you, there may be hope in preventing the foreclosure.  Every situation is different, and we don't want to give you false hope, but sometimes things can be done.

If you're facing foreclosure, we'll go over your unique details and see if there is something we can do.  It is important that you not withold information or give misleading information because that will only make things worse and delay the process, and if you're facing foreclosure there isn't time to waste.

Even if we can't help you, there might be other solutions, so try to keep an open mind and learn what your options are and don't give up if you don't have to.

Sincerely,

John Smith

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