“I’ll get you a second mortgage with lower monthly payments”

“We’ll buy your house as it is”

“I’ll save your credit”

“If you sell the house to my company, the foreclosure will not be recorded against you. It’ll go on our records”

He might seem like a godsend sent to bail you out of your distress. In all likelihood though, the person is probably an experienced scammer who is only out to steal your money, your home, or both. The ‘bail out’ foreclosure scam is one of the most popular scams that con artists pull on unwary homeowners. It’s extremely easy to trick a homeowner into signing away the deed of their house, simply because their offer sounds so reasonable.

The person might tell you to sell your house to them at a very cheap rate while reassuring you that it’s not a real sale. They are quick to point out that it’s only a temporary measure designed to buy you time until you get your finances in order. You are told that you’ll be able to stay in your own home as a renter until you’re ready to buy it back from the company, with a little interest at the end of a pre-determined time period. They say they’ll relieve you of your financial distress and help you save your home from foreclosure while making some profit in the process as a rescuer. You get to live in your own home, improve your credit and buy it back when your situation improves. Sounds like a win-win for all doesn’t it?

The truth is that it is possible to save your home this way if you do get help from an ethical legitimate company. A genuine company will charge a moderate fee or might negotiate for a portion of your home’s equity in exchange, or will include some interest in the buyback price for their role in the rescue. It’s a reasonable trade since the company is using their good credit to get a second mortgage that bails you out of your desperate situation and temporarily holds the deed for you. A person who knocks on your door though and makes such an offer is probably up to no good. You need to seek out a reputed company and do a thorough background check before agreeing to such an offer. You might end being ruined otherwise since its possible to lose your home, your home’s equity and still be liable for your mortgage payments simply because you unwittingly agreed to a fraudulent deal.

So seek out an ethical foreclosure rescue company. There are many resources that will help you find a legitimate outfit. The hallmarks of a fair deal include-

1) Complete written and verbal disclosure. The company will give you copies of all the documents.

2) The contract will specify favorable terms and conditions that you can actually meet.

3) A reasonable pre-determined fee for the rescuer.

You can buy your home back if you do strike a workable deal. Make sure to go through all the documents word by word and get it thoroughly checked out by your lawyer before you sign any contract.

Perhaps you’ve been searching for information everywhere on what you can do to stop it. There’s a great deal of data online about how you can stop foreclosure and the alternatives available to you. Quite a few books and websites offer exhaustive information on the subject and can be a real help in walking you through various options.

Unfortunately, the sheer anonymity offered by the web has made it an ideal haunt for scam artists interested in siphoning off your money under the pretext of helping you rescue your home from foreclosure. There are quite a few websites that are little more than online storefronts for these scammers out to make a quick buck.

It’s easy to get sucked in by the promises they make since their sales pitch will usually contain photographs of ecstatic homeowners whose homes have been saved thanks to the foreclosure rescue specialist. These sites may offer audio clips of people describing their experience, in addition to the fake testimonials.

If something sounds too good to be true, the liklihood is it’s probably a scam. Your instincts are there for a reason — Pay attention to them. It’s easy for scammers to rip people off before anyone catches on to them and transfer their storefront to another domain name at the first sign of trouble. It can be almost impossible task for authorities to pinpoint and shut down these outfits. They’ve usually disappeared by the time anyone makes a complaint.

Pay attention to the following tips to avoid being scammed online:

1) Never surrender any information like your credit card details, social security numbers and other personal information to any website promising to rescue you from foreclosure. You might be asked to submit all this information for the foreclosure rescue company to review your situation and your credit history. Don’t submit this information at any cost.

2) Check to see whether complaints pop up against the business by doing a search on the company or individual’s name, along with search strings that include words such as scam, complaint, fraud etc.

The best way to avoid being scammed is not conduct any financial transaction online involving foreclosure rescue. Find an offline foreclosure rescue outfit that you can interact with face to face which has an actual office that you can go to and personnel or help-lines that you can interact with. This will give you an added layer of security as opposed to interacting with unknown people on a site or email address.

It’s probably not easy for you to get a loan from a lender of bank, if you are a senior facing the threat of foreclosure. It can be difficult to find somebody who will offer you a second loan on a fixed income or pension, without pledging any collateral. This is where a con artist steps in, offering to refinance your existing mortgage, typically replacing them with more expensive loans that you cannot afford to pay. When you eventually default on these payments the scammer might offer to find a buyer for you home and pocket any equity available as service fees. There are many variations of equity scams that thousands of homeowners fall prey to every year.

Another very popular scam that con artists pull on seniors features a ‘home improvement’ or ‘home repair’ hook. This type of con can even push an otherwise financially comfortable senior into foreclosure. The scammer appears disguised as a contractor and offers to make repairs on your home. They may recommend some very attractive financing options but the loans they will arrange will be out of your league or they may keep on increasing the amount you have to pay by quoting more problems they’ve uncovered in the course of their repairs. Defaulting on the loan or being unable to meet the rising cost of repairs can easily push you into foreclosure.

Unfortunately, seniors make very easy victims. They might not be sophisticated enough to handle complex legal issues and might be more than happy to have someone handle it for them. Many of them might be single or be widowers and may not be financially savvy. They might also be more trusting of people and more easily intimidated by fast-talking con artists. It’s also easy to befriend a lonely senior, scam them under the guise of providing friendly counsel and have them sign over the deed to their house. There have been many reported cases of even family members scamming their elderly relatives.

The only way to be safe is to not fall for any of these scams. Be extremely suspicious of anyone who knocks on your door offering to save you from foreclosure by taking out another loan or who offers to make home repairs uninvited. If you do plan to make repairs, it’s best to contact a legitimate contractor, check out competing bids and do a background check on the license of the contractor you decide to go with. Don’t sign over the deed of your house to a friend or family member without getting some legal counsel. If you fall into the low-income category you may qualify for free legal aid.

Contact a Consumer Credit Counseling Service office or your local legal aid center to get more information on the options available to you as a senior to avoid foreclosure.

Mortgage fraud rates have doubled in the last year according to FBI reports and the numbers are only expected to increase with the rising rate of foreclosures across the country.

There are many types of scams and quite a few variations of them. The National Consumer Law Center has identified the top three most popular and dangerous scams to be

1. Fake Help: The scam artist poses as a professional who has dealt with cases similar to yours and will offer you proof of his successful track record. He’ll offer to help you out in the foreclosure process and stop it entirely by utilizing his knowledge and the special resources available to him. His services will typically come at a hefty price tag that you’ll have to pay up front.

Scammers have charged and collected up to $1300 from homeowners desperate to stop their foreclosure. Usually the services the scam artist promises to handle are things you could have easily done yourself. You’ve been hoodwinked out of money that you could have used to get legitimate help from a lawyer and your house is likely to be too far along in the foreclosure process to save it, by the time you realize that you’ve been conned.

2. Bait-and-Switch scam: It might be possible to save your home if you could just refinance your mortgage and if you fit this particular profile, you might be at risk of being the victim of a ‘bait and switch’ scam.

You may think that you’re applying for a new loan but in actuality the scammer has sneaked in papers or has introduced legal language that surrenders your home to him. As reprehensible as it sounds, you can actually sign away ownership of your house without your knowledge, in exchange for a ‘rescue’ loan.

3. Rent-to-Buy Scam: You’re presented with a very sensible deal that allows you to stay in your home as a renter for a specified lease period. You are asked to sell your home to the scammer, which will allow him save your home by securing new financing with his good credit rating.

You agree to this scam and sell your home for a cheap price. The catch is though that the deal is structured in such a way that you possibly can’t win. You wont be able to buy back your house and the scammer might have you evicted or might default on the new loan and the house goes into foreclosure again.

Instead of saving you from foreclosure, these scams make it inevitable. Thousands of homeowners have had their lives shattered as a result of falling victim to these ’stop foreclosure’ scams.

How do you find out how much time you have left and the options available to you? It’s terrifying to realize that you are on the brink of losing your home, especially after you’ve worked and sacrificed for so many years for the privilege of owning one.

An individual or organization approaches you in this state of confusion and offers to take the load off your back. They promise to handle the entire situation and state that they will take all the legal actions necessary to help you save your home. They show you case studies of former happy clients with smiling faces and references that check out. All you have to do is pay them their fee, put up your feet and relax.

Sounds too good to be true? The phantom help scheme is easily one of the most successful scams out there. It’s simple to dupe homeowners with false offers of help since they feel so unequal to facing such a trying situation. The homeowner may not be sophisticated enough to truly understand complex legal procedures or they may be intimidated by all the legalese. People from poor economic backgrounds and senior citizens are especially vulnerable to phony help offered by fast-talking scammers.

In almost all these cases, the individual offers to help you with things you could have easily done yourself for free. They may offer to-

* Make a number of important phone calls

* Negotiate a better mortgage payment plan with your lender

* Offer to discuss a refinancing loan with your bank

* Take on any additional administrative duties that are involved

* Promise to pull a big rescue down the line by pulling some strings

The scammer will happily charge you thousands of dollars for these simple services and assure you that they are doing everything that they humanly can to stop the foreclosure. What the scammer is actually doing though, is pocketing your money and delaying you from getting any real help. They will not do anything to stop the foreclosure and may ask you to cut off all contact with your lender and ignore any letters you might receive from the lender. If you express any doubts they will demonstrate false proof of their successful track record in similar cases.

By the time you realize what’s actually going on, it might be too late to stop the foreclosure. You can avoid becoming a victim of this particular scam by-

1) Not contacting any foreclosure rescue specialist who advertises his services via fliers, hand-written signs and door-to-door marketing.

2) Never paying for any ‘foreclosure rescue service’ up front. It’s illegal in most states to require you to pay an up front fee for assistance if you are in foreclosure.

3) Never sending your mortgage payments to anyone other than your lender. The ‘rescuers’ may offer to collect your mortgage payments and pay your lender on your behalf.

4) Contacting a state-certified counseling agency that will happily advise you on your situation at no extra charge.

If you are facing foreclosure, then the money you’ve piled up in your home’s equity can be a lifesaver. Unfortunately many scam artists are out to strip you of the equity you’ve built up over the years and it’s frighteningly easy for them to do so with a ‘bail out’ offer. An individual or company might approach you with an offer to buy your house and sell it back to you later when your finances improve.

Let’s say your house is worth $550,000 and you’ve got $150,000 worth of equity. You decide to sell it to them for $400,000, which is just about what you owe on your mortgage. This isn’t a true sale in your mind, which is why you decide to sell your home for a song. You believe that it’s only temporary and that you’ll be able to buy it back pretty soon.

The company will take out a $400,000 loan as the first step towards draining your property of its equity. They may give you a little sum of money and get you to sign on to a two-year lease with the opportunity to buy it at the end of the lease period. Your situation goes from bad to worse pretty soon. The company might begin with a low rent figure and increase it steadily to the point where you can’t afford to pay the rent anymore.

You may not be able to meet $1500 a month but you have no choice but to agree to the higher rent. Instead of giving you time to repair your finances you are now worried about defaulting on your rent payments. The company evicts you from the property once you start defaulting on the rent, sells your $550,000 home, pays off the loan and pockets a neat $150,000 all for just a few months of work.

In many cases the homeowner does nothing about the situation simply because they don’t realize they’ve been scammed. It is possible to save your home with this strategy if you do find a legitimate company that is willing to bail you out. Unfortunately most of the foreclosure rescue companies out there are little more than fly-by-night operations set up to steal money from unsuspecting homeowners. You can avoid being a victim of this type of scam in the following ways:

1) Consulting a lawyer on any documents that you are asked to sign. Scammers will typically present you with a ‘quit deed claim’ document that’s written entirely in their favor.

2) Avoiding any home sale contract that doesn’t release you from your liability to pay off your mortgage. It is possible to sell your home and still be liable for the mortgage payments.

3) Being well informed about your rights and the legislation regarding home equity theft passed in your state.

According to RealtyTrac one percent of all US households were in ’some stage of foreclosure’ in 2007. A staggering 2.2 million Americans filed for foreclosure the same year. The shaky economic situation has resulted in a lot of cash-poor but house-rich owners who are desperate to hang on to the last real asset they have left. Many of them are frightened and overwhelmed making them easy targets for an emerging breed of scam artists out to con them out of their homes under the guise of helping them.

Being both extremely lucrative and having a very low-risk factor the foreclosure rescue scam business has ballooned frighteningly in recent times. Foreclosure figures are expected to increase sharply giving scam artists a steadily increasing pool of potential victims.

Foreclosure rescue scams and mortgage fraud were identified as one of the top five ‘fastest-growing crimes’ and ‘worst complaints’ to plague the country, according to a report released on July 30, 2008 by the Consumer Federation of America. (http://www.consumerfed.org/pdfs/07_complaint_report.pdf) The ‘worst complaints’ category is based on the number of people affected.

The FBI is also struggling to cope with the rise in mortgage fraud. They received 46,717 Suspicious Activity Reports related to mortgage fraud in 2007 and while only seven percent of these reports specified the amount of money lost, the total dollar loss from just this seven percent was $813 million. Their caseload on mortgage fraud has tripled in recent times and the agency expects foreclosure rescue scams to increase in number for at least the next two years.

The FBI’s chief of financial crimes, Sharon Ormsby, believes that the problem of foreclosure rescue scams will only worsen. She commented on the issue in a recent news report on USAToday and said, “The scope is probably going to be potentially as large as the mortgage fraud problem itself.”
(http://www.usatoday.com/news/nation/2008-08-04-foreclosure-scams_N.htm)

The problem has become so critical that 14 states have passed new legislation this year in an effort to protect homeowners from falling prey to ’stop foreclosure’ scammers. Homeowners in financial distress, though, fall victim all too easily. Scam artists use a variety of techniques to find their victims–sending them mail, leaving flyers on their doorstep, bombarding them with phone calls every day and even sending pleasant looking company representatives to their door.

It’s simple to lure distressed homeowners willing to do anything to save their home with advertisements like

‘Stop Foreclosure Today’
‘We Can Save Your Home–Free Consultation’
‘Our Experts Will Stop Your Foreclosure This Week’
‘You’ll Lose Your Home If You Don’t Call Us’.

It’s difficult for any homeowner to verify the authenticity of the person or company since these many of these advertisements typically carry only a phone number. Most of these outfits are fly-by-night operations that milk the homeowner out of cash, their home’s equity, their home or all three. Considering the huge amounts of money involved in home equity, it only takes about ten such scams for a con artist to become a millionaire.

If you are a homeowner facing the threat of a potential foreclosure and want to find a way to genuinely save your home without being ripped off, learn all you can about foreclosure rescue scams. The only way to avoid being conned is to know what to look out for. You can avoid the humiliation of being scammed and losing your money by taking a few precautionary steps.

A legitimate counseling agency or a reputed lawyer can help you with the right answers to these questions. Most homeowners don’t know how to find a counseling service or may not be able to afford expensive legal counsel. You may find yourself being contacted by someone who does seem to have all the answers to your questions and who is willing to handle the foreclosure process on your behalf. He may call himself a ‘foreclosure rescuer’ or a ‘foreclosure counselor’ and offer you any number of options to save your home, from getting a second loan to offering to buy your house from you.

The rescuer, in all likelihood, is probably a scammer who is getting ready to steal your home or a substantial amount of money from you. Foreclosure rescue fraud rates are escalating all over the country. You can find a news item almost everyday about someone who was evicted from their home or a fraudster who walked away with hundreds of thousands of dollars in home equity funds.

Signs featuring statements like — ‘We buy houses’, ‘Instant cash for your home’, ‘Fast cash loans’, ‘Refinance your mortgage’ seem to be everywhere these days. They can be found nailed to trees, hanging on fences, mounted on telephone poles, even on billboards. And these notices often do nothing but advertise the scammer’s phone number to a gullible, desperate public. It’s difficult for authorities to take action on these scammers, since they are careful to not do anything directly illegal but operate in underhand and unethical ways to achieve their ends.

For instance, many ‘We buy houses’ scams focus on getting the homeowner to agree to a second loan. The scammer tricks them into signing over the deed of their house under the guise of filling out a loan application. Another strategy is to offer the homeowner the option of living in their home as a renter, while the scammer buys their house at a cheap rate with the promise of selling it back to them at the end of their lease period. The con artist has no intention of selling your home back to you. Instead they will make it impossible for you to meet the terms of the contract by either raising the rent, stealing your mortgage payments, taking out a second loan on your house without your knowledge, or any combination of all these.

The only way to truly avoid foreclosure fraud is to be aware of their tactics and exercise a little caution every step of the way. Don’t sign anything you don’t understand or that isn’t clear or has a lot of blank spaces. And get everything (EVERYTHING) checked out by your lawyer. If you decide to sell your home, contact an established real estate firm to handle the deal on your behalf or sell it yourself. This way you’ll at least get the equity left in the property after you’ve settled your mortgage payments and any arrears.

In this classic foreclosure scam called the ‘Bait and Switch’, homeowners are tricked into signing over ownership of their house, without their awareness. Is that really possible? Unfortunately, it’s just all too easy to pull this type of scam. These con artists present homeowners with convoluted legal papers that contain clauses transferring ownership of their home to a company or even a trust. It’s difficult even for law-savvy attorneys to understand trust agreements let alone homeowners who have little legal knowledge. Failing to get your signature might not be a setback for an experienced scammer. They’ll simply forge your signature on the deed transfer documents.

Once you’ve signed away your home, an eviction notice might be the first sign that you get of being scammed. Homeowners can spend years contesting the fraud in court, embroiled in expensive trials, while fighting to get their home back. There’s no guarantee that you’ll win your home back once you’ve signed it away. The best strategy here is to avoid falling victim to this scam. You can do that by-

1) Never signing any document that has incomplete information or blank spaces. Shysters can fill up these spaces with any information later on.

2) Never signing anything in a rush. Take time to review everything fully

3) Get everything checked out by your lawyer–Not a lawyer provided by the foreclosure specialist.

4) Getting all the agreements down in writing. Verbal agreements don’t hold up in court.

Prevention is truly the best medicine in this case. You can prevent yourself from being defrauded with a little foresight, caution and good sense. Don’t bite if a deal seems to offer a miracle. That’s the first sign of it being a scam.

Don’t also fall for any pitch that includes repairing your credit history or eliminating your debt entirely. It’s just not possible to wave a magic wand and have these things disappear from your credit history. Some scammers even throw in a free vacation or a sum of cash to sweeten the deal. Don’t give in to your desperation and sign a stack of papers, hoping for things to turn out well. Trust your instincts.

If you reached the unavoidable position of having to sell your home, remember that it’s not the end of the world. You can use the cash you receive from the sale of your home and any equity you have left in the property. This will help you to make a fresh start. Use the services or a reputed real estate firm or sell your home yourself. Being a renter once again is way better than being scammed out of your home.

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 or foreclosure assistance firms claim they can help you save your home. Some are brazen enough to offer a money-back guarantee. Unfortunately, once most of these foreclosure fraudsters take your money, they leave you much the worse for wear.

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it’s too late to save your home, they take the property or siphon off the equity. You’ve lost your home to foreclosure despite your best intentions.

If you think you may be facing foreclosure, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to recognize a foreclosure rescue scam. And even if the foreclosure process has already begun, the FTC and its law enforcement partners want you to know that legitimate options are available to help you save your home.

How the scams work

Foreclosure rescue firms use a variety of tactics to find homeowners in distress: Some sift through public foreclosure notices in newspapers and on the Internet or through public files at local government offices, and then send personalized letters to homeowners. Others take a broader approach through ads on the Internet, on television, or in the newspaper, posters on telephone poles, median strips and at bus stops, or flyers or business cards at your front door. 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 everyday. Our team of professionals can stop yours this week!”

Once they have your attention, they use a variety of tactics to get your money:

Phony counseling or phantom help

The scam artist tells you that he can negotiate a deal with your lender to save your house if you pay a fee first. You may be told not to contact your lender, lawyer, or credit counselor, and to let the scam artist handle all the details. Once you pay the fee, the scam artist takes off with your money.

Sometimes, the scam artist insists that you make all mortgage payments directly to him while he negotiates with the lender. In this instance, the scammer may collect a few months of payments before disappearing.

Bait and switch

You think you’re signing documents for a new loan to make your existing mortgage current. This is a trick: you’ve signed documents that surrender the title of your house to the scam artist in exchange for a “rescue” loan.

Rent to buy scheme

You’re told to surrender the title as part of a deal that allows you to remain in your home as a renter, and to buy it back during the next few years. You may be told that surrendering the title will permit a borrower with a better credit rating to secure new financing – and prevent the loss of the home. But the terms of these deals usually are so burdensome that buying back your home becomes impossible. You lose the home, and the scam artist walks off with all or most of your home’s equity. Worse yet, when the new borrower defaults on the loan, you’re evicted.

In a variation, the scam artist raises the rent over time to the point that the former homeowner can’t afford it. After missing several rent payments, the renter – the former homeowner – is evicted, leaving the “rescuer” free to sell the house.

In a similar equity-skimming situation, the scam artist offers to find a buyer for your home, but only if you sign over the deed and move out. The scam artist promises to pay you a portion of the profit when the home sells. Once you transfer the deed, the scam artist simply rents out the home and pockets the proceeds while your lender proceeds with the foreclosure. In the end, you lose your home – and you’re still responsible for the unpaid mortgage. That’s because transferring the deed does nothing to transfer your mortgage obligation.

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver.

Bankruptcy foreclosure

The scam artist may promise to negotiate with your lender or to get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, though, the scam artist pockets the fee and files a bankruptcy case in your name – sometimes without your knowledge.

A bankruptcy filing often stops a home foreclosure, but only temporarily. What’s more, the bankruptcy process is complicated, expensive, and unforgiving. For example, if you fail to attend the first meeting with the creditors, the bankruptcy judge will dismiss the case and the foreclosure proceedings will continue.

If this happens, you could lose the money you paid to the scam artist as well as your home. Worse yet, a bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job.

Where to find legitimate help

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule. Remember that lenders generally don’t want to foreclose; it costs them money.

Red flags

If you’re looking for foreclosure prevention help, avoid any business that:

– 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.

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately.

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