Thursday, January 15, 2009

Watch Out for Forclosure Ripoffs.

The heartbreaking foreclosure crisis has brought out another brand of vultures: rip-off artists who claim to help people in danger of foreclosure. The New York Times has an article outlining these scams. Owners are told, often in a seminar, that if they pay up-front fees to the fraudulent companies, these companies will renegotiate their mortgages for them. Instead, the re-negotiated mortgage may still be one that does not fit the owner's needs. Or, even worse, the company may do nothing at all and simply pocket the homeowner's money, and the owner does not know until it's too late to do anything.

The rip-off companies often pretend to be non-profit, or use non-profit language. They will often lift text directly from NeighborWorks, the nonprofit organization that works to prevent foreclosure. Another ploy is to use official-looking logos to pretend that they have some tie to the government. The Federal Trade Commission has a good article that outlines shady practices to look out for. Beware if your "savior" wants/tries to do the following:

guarantees to stop the foreclosure process – no matter what your circumstances

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.

Watch out for all of these practices, and refuse to do business with a "foreclosure specialist" that does them. Work with a local nonprofit instead. If you have been a victim of such as a scam, contact the FTC at 1-877-FTC-HELP (1-877-382-4357) or your state's attorney general office to file a complaint. And contact your lender IMMEDIATELY if you have problems with your mortgage.

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