In many areas you can’t stop at a red light without seeing a poster tacked to a pole offering “help” to save your home. Thieves are shameless when it comes to preying on desperation. They know anyone who is facing the loss of a home is probably terrified and willing to grasp at any straw. If you or someone you know is in danger of foreclosure, be on guard against offers to help you. It is true there are some new government programs which can help, but there are a lot more scams. You need to know the difference.
The Federal Trade Commission (ftc.gov), which is the U.S. consumer protection agency, says scam artists deal in half-truths, if not outright lies. They promise relief and will be your best, most sympathetic friend, for now. Often, by the time they are done, they leave their customers far worse off than before.
They may:
- Claim most of their customers successfully save their homes from foreclosure, and may say they offer a money-back guarantee.
- Tell you they are affiliated with the government or your own lender.
- Promise the help of attorneys or real estate professionals as part of their service.
No Help No Pay
In an attempt to protect us from scam artists, the FTC put in place the Mortgage Assistance Relief Services Rule, which makes it illegal for companies to collect any fees until you, the homeowner, have received and accepted a bona fide offer of relief from your lender. In other words, even if you have agreed to accept help from a company, if the results you get are not what you wanted, you do not have to pay.
If you have been contacted by (or if you have called) a company which promises relief from the threat of losing your home, the FTC wants you to be aware of some typical language scam artists use, on flyers, bus stops, business cards, whatever they can slap a slogan on:
“Stop foreclosure now!”
“Get a loan modification!”
“Over 90% of our customers get results.”
“We have special relationships with banks that can speed up the approval process.”
“100% Money Back Guarantee.”
“Keep Your Home. We know your home is scheduled to be sold. No Problem!”
The FTC warns, thieves will go to great lengths to appear legitimate in order to win your trust. Thieves would have you believe they have no self-interest and are thinking only of you, when in reality they have a great deal to gain and you have everything to lose. Here are some of the schemes the FTC has run across:
Offers of Counseling or Other Help: For a fee, they say, they will help you negotiate with the lender to lower your payments and save your home. A few tip offs to this scam are: they may claim to be attorneys, tell you not to contact your lender or other adviser, they may tell you the help begins when you pay a fee, and they may instruct you to pay your mortgage payments directly to them. If you are contacted by someone like this, don’t walk away… run!
Offer to Audit: Another scam involves an offer to have experts review your mortgage documents to ensure the lender complied with the law. The idea is to help you avoid foreclosure, reduce your mortgage, or even cancel your loan. The FTC says there is no evidence this kind of “help” will provide any relief.
Rent-to-Buy Scheme: This is a scam where thieves try to convince you to surrender your home’s title as part of a deal where you then rent your home from them and you presumably will buy it back later. In reality, the “deal” generally becomes so expensive you cannot possibly regain the title to your home, and you lose it. They walk away with all the money you put into the house, then the new “owners” default and you are evicted. Again, don’t walk away, run, run, run!
This scam has other variations, such as renting your home to you but they neglect to say they will raise the rent till you can no longer afford it and you are evicted.
Don’t Pay a Fee Unless… : Again, the FTC reminds you there is no obligation to pay any money until the company delivers the results you want. The company is acting illegally if they charge you any fee before: they have given you a written offer regarding the changes to your loan or loan relief and you have accepted the offer and been provided with documents regarding the agreement, including a clear statement of all fees.
There is Real Help
If you cannot pay your mortgage, contact your lender immediately, says the FTC. The simple truth is, lenders are not in the real estate business. They do not want your home. They prefer to find a way to keep you in your home and paying your mortgage, even if it means modifying the loan.
If you think you have been contacted by scam artists operating a foreclosure fraud, contact the Federal Trade Commission, the Better Business Bureau, or the office of the Attorney General for your state.
Legitimate Credit Counselors are available through the Homeownership Preservation Foundation. This is a not-for-profit organization which you can reach 24/7 at this toll free hotline, 1-888-995-HOPE. It is free and offers bilingual help.
Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.