Scams and Companies to Avoid
Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far away from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges outrageous fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
The bait-and-switch / Equity Skimming: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice. Signing over your deed does not necessarily relieve you of the responsibility of paying the loan.
Predatory lending schemes and Foreclosure Loans: This type of scam may be the reason you are in foreclosure. If you choose a foreclosure loan to try to solve your current dilemma, it will most likely push you deeper in the hole, making foreclosure inevitable.
Most mortgage lenders are trustworthy and provide a valuable service by allowing families to own a home without saving enough money to buy it outright. But dishonest or “predatory” lenders do exist and engage in lending practices that increase the chances that a borrower will lose a home to foreclosure. Beware especially of those who make high risk second mortgages.
Other abusive practices include:
- Making a mortgage loan to an individual who does not have the income to repay it
- Charging excessive interest, points and fees
- Repeatedly refinancing a loan without providing any real value to the borrower
Borrowers facing unemployment and/or foreclosure are often targets of predatory lenders because they are desperate to find any “solution”.
Homeowners receive many refinance offers in the mail saying they are “pre-approved” for credit based on the equity in their homes. Borrowing against your house may seem attractive when you are struggling to pay your mortgage and other bills. But stop and think about this: if you can’t make your current payments, increasing your debt will make it harder to keep your home, even if you get some temporary cash. No matter how tempting these offers may be, you need to stay away from them!
4 IMPORTANT RULES
- Do not sign anything you do not understand.
- If it sounds too good to be true it is.
- It is your right and duty to ask questions.
- Information is your best defense against scams.
If you feel that you have fallen victim to deceptive and unfair business practices in the marketplace, you can file a complaint with the FTC by visiting www.ftc.gov or by calling toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
Above board businesses and professionals you can trust:
- Attorneys offering relief through Bankruptcy.
- Investors offering to help you.
- Realtors offering to sell your home.
