Foreclosure Scams To Be Aware Of

Facing the threat of losing a home to foreclosure, a homeowner will often be plagued by individuals and companies offering to help them out of their "difficult financial" situation.

 Unfortunately in most cases, these problem solvers are mainly trying to capitalize on the hardships that have been caused by a financial and economic crisis.

As you have probably already seen on the news, most of the common scams come in the forms of direct mail offering to "negotiate" on behalf of the homeowner for a nominal fee by offering to reinstate the loan in exchange for taking title and leasing the home back to the homeowner.

Common Foreclosure Scam Tactics:

By the simple nature of public information laws, people facing foreclosure are vulnerable to con artists and scams. 

For example in Arizona, a lender initiates the foreclosure process by filing a Notice of Trustee Sale with the county recorder.  This notice is the equivalent of posting a large 50 foot neon sign above someone's house saying, "Here I am, take advantage of me!" because shrewd individuals and companies know that the homeowner is in trouble and will often times do anything to resolve the problem.

The following is a list of people to be aware of:

Unethical Realtors Trying to Take Your Equity

Real estate agents (many claiming to be "pre-foreclosure" specialists) offer to reinstate a person's loan and sell the house with the idea of salvaging any accrued equity and appreciation in the home. The catch is that the homeowner must split the earnings with the agent instead of paying a commission. The reality is that the homeowner could have hired a competent agent and accomplished the same end result with less money out of pocket.

Investors Trying to Take Your Equity

Many Investors (i.e. I/We Buy Houses people) approach homeowners facing foreclosure and try to take their home and equity without offering any other assistance. An ethical person would not simply take your equity without trying to exhaust every effort to help you save your home and equity. These unethical people have no other answers for you other than taking your home and are just trying to make money off of your problems.

Foreclosure Consulting Agencies

Many investors set up mask companies to make themselves look like a foreclosure assistance company. These investors and companies only have their own interest in mind and are trying to make profits off of homeowners. They are either after homeowners’ equity or property deeds, or they get them to sign a purchase agreement that they can assign to someone else for a profit. These individuals are easy to identify by simply asking them if that in doing business with them it is going to involve you having to sign a purchase agreement with them or deed them your home.

Debt Negotiating Companies

Companies, reputable and not so reputable, offer to negotiate or consolidate the debt for the homeowner. The catch is that the homeowner must prepay for these services. These individuals do not offer anything that other non-profit agencies will provide free of charge.

“Financial Services” Companies

There has been a proliferation of individuals, often posing as a financial services company, that offer to assist homeowners facing foreclosure with everything from tax advising, debt management, real estate sales and pre-foreclosure sales. The reality of these individuals is that they do not run legitimate corporations (according the Arizona Corporations Commission) and are not legally licensed as required by the Arizona State Banking Department for debt or credit counseling.

Visitors

Expect many people, including investors and real estate agents, to visit your home. They will paper your house with flyers, knock on your door at all hours, and stalk you and your family until they have an opportunity to speak with you. The worse perpetrators are individuals posing as government employees dispatched to your home to assist you. The lender, the County, and the Federal government will not send out personal representatives to assist you unless you have initiated the call to the right agency.