The number of foreclosure rescue scams in the U.S. is growing rapidly. In these scams, homeowners who are facing foreclosure are promised help to save their homes. Those involved in foreclosure rescue fraud end up stealing the homes from those they promised to help. Many collect large fees for services they don’t end up providing and take off with the money leaving the homeowner still owing the money for the loan.
Foreclosure rescue scams generally fall into one of three categories:
- Bailout. In these scams, the scammer bails the homeowner out by telling them to sell the home to the scammer. The scammer tells the homeowner to rent the house from the scammer. Often with a bailout scam, the scammer will then fix the rent so high that the homeowner can’t pay and is forcefully evicted. The scammer will then find another buyer and the homeowner ends up losing the home anyway.
- Phantom help. Sometimes scammer contact homeowners by offering to help them out of foreclosure. The scammer will charge high fees for phone counseling and paperwork that the homeowner could do themselves. Ultimately, the home still goes through the foreclosure process and the scammer disappears with the money.
- Bait and switch. The bait and switch foreclosure scam involves the scammer telling the homeowner that they are signing documents for a new loan that will solve their foreclosure problems. The homeowner signs the documents unaware that they are signing the title/deed to the home to the scammer. Generally in this case, the homeowner will still owe on the mortgage loan but won’t have the asset anymore.
Scammers will often offer help but recommend that you cut off all contact with the lender and any other counselors you may be working with. However, if you are involved in a foreclosure, you should never cut off contact with the lender, so you can try to work out a solution to fix the problem. Scammers lie, exaggerate and misinform to try and gain the homeowner’s trust. Don’t ever make any payments to anyone but your lender. If you are questioning any information or counseling you are receiving, contact your lender. There are many reputable counseling agencies that are certified by the Department of Housing and Urban Development (HUD) and can legitimately assist you with the foreclosure issue. Certified counselors should not make you pay for housing counseling. An attorney can also be a good resource.
If you believe you have been the victim of a foreclosure rescue scam, you should file a complaint with the Federal Trade Commission (FTC). Visit the FTC’s online Complaint Assistant or call 1-877-382-4357.