Foreclosures rates are on the rise again. Thousands of homeowners in Wisconsin will be facing a foreclosure law suit soon. For those of you struggling to make your mortgage payments, beware there are people willing to exploit your troubles.
Foreclosure rescue scams are rampant and lots of innocent people are being conned out of what little money they have. They’re being promised that the foreclosure can and will be stopped if only they pay a hefty fee.
Don’t be fooled by these con artists. Many times, they take your money, don’t follow through on any of the promises they’ve made, and disappear, leaving you in a worse position.
The most common scams are:
Rent-to-Buy: Someone tells you they will buy the property and let you to rent it back at a reasonable rental rate until you can afford to buy it back. Oftentimes, the investor will have you sign over the title to the property, but the homeowner’s mortgage is never paid off. The investor may make a few mortgage payments, but eventually stops paying and the lender forecloses.
Straw Men: Again, someone tells you they will buy the property and let you to rent it back at a reasonable rental rate until you can afford to buy it back. The investor immediately re-sells the house to someone else, who then evicts you.
Equity Skimming: This involves a scenario where the scam artist offers to find a buyer for the home on the condition that the homeowner convey title over to the investor and move out. The scammer then rents the property and collects rent until the homeowner’s lender forecloses.
Phantom Counseling: the scammer promises to negotiate with your mortgage company in exchange for an up-front fee which can be up to $5,000.00 or more. The scam artist insists that you cease all communication with your lender, attorney, credit counselor, and any other third parties. The scammer will also insist that you make all mortgage payments to him so he can send it to the mortgage company once a modification has been negotiated. The scammer actually pockets the money and disappears; the lender eventually forecloses.
Bait-And-Switch: The scammer has you sign mortgage documents that supposedly contain more favorable loan terms. In reality, the documents transfer title to the property to the scammer in exchange for a “rescue loan”, which is in essence a payment by the scammer to the lender to bring the homeowner’s loan current.
You need to be aware of what to look for if you are look for help from a company that claims to specialize in foreclosure rescue. Because all of these scammers use outright lies, half truths, threats, and scare tactics to take advantage of desperate homeowners, it’s important to ask lots of questions and to never rush into anything. Here are a few red flags that may signal you’re dealing with a con artist:
· Guarantees that the foreclosure can be stopped;
· Requiring an up-front fee and/or only accepting payment in the form of a cashier’s check or wire transfer;
· Insisting that you stop communicating with your lender, lawyer, or credit counselor;
· Insisting that you remit mortgage payments to the foreclosure rescue company;
· Refusing to allow the homeowner to have the documents reviewed by an attorney or other real estate professional;
· Insisting that the homeowner sign documents he hasn’t read or does not understand;
· Offering to fill out the paperwork for you.
If you feel you’ve been the victim of a foreclosure rescue scam you can report it to the Federal Trade Commission at 1-877-FTC-HELP (1-877-382-4357) or to the Wisconsin Attorney General.