If you are very late on your mortgage payments, and your lender has threatened or started home
foreclosure proceedings, be careful about dealing with companies who claim they can help you avoid foreclosure.
There are many scammers that take advantage of borrowers when they are at risk of losing their home to foreclosure.
Typical Home Foreclosure Scams
Scammers take advantage of borrowers' fear and embarrassment, and many people have jumped at a quick
solution to a problem they didn't want to face. Home foreclosure typically scams fall into three major categories:
- Foreclosure Bailouts:
Homeowners are told that by signing their homes over to scammers they are no longer responsible for the remaining balance
on their mortgage. Scammers promise to pay off the debt or to sell the house on behalf of the owner. Instead they rent the
house back to either the homeowners or someone else, pocketing the money until the house is ultimately lost in foreclosure.
- Misleading Foreclosure Documents:
In this scam, homeowners are told that they are signing documents that will restructure or refinance the loan.
They don't realize they handed over title to the house until the eviction notice arrives.
- Foreclosure Promises, Promises:
Scammers tell the homeowners that they specialize in foreclosure avoidance. They make extravagant claims and charge exorbitant
fees to make a few phone calls. In the end, however, they do nothing to stop the loss of the home.
Talk to Your Lender First about Refinancing Options
Lenders need to protect their interests, but prefer to avoid foreclosures if possible. FNMA (Fannie Mae) encourages lenders to prevent
foreclosures and works with borrowers who have trouble making mortgage payments. Options include re-writing the note to include the defaulted
amount or letting the borrower make up the delinquency over time. If your lender won't work with you to find a solution, another one may
be willing to refinance your defaulted loan. Look at legitimate options from reputable
mortgage lenders and avoid scam artists who promise an easy out.
Sources:
All Foreclosure Information
Bankrate
FNMA (Fannie Mae)
About the Author
Gina Pogol works as a writer and editor for an online media company. She has a BS in financial management, was formerly
a business credit systems consultant with Experian and a mortgage loan consultant.
