Common Foreclosure Scams and How to Avoid Them
Receiving a foreclosure notice on your home is a scary moment, and can make you feel helpless and frustrated. Rather than burying your head in the sand, it’s essential that you take immediate action to resolve your foreclosure issues to your benefit. When seeking help with your foreclosure, beware of scam artists that are looking to take advantage of homeowners in vulnerable positions. Foreclosure scams are common, but they can be avoided if you know what to look for.
Your foreclosure is a matter of public record, and this can bring scammers right to your door. Some of these individuals will offer to save you from foreclosure by buying your home. While selling your home is a viable option when you’re behind on your mortgage, be careful to whom you sell.
One common scam involves a “buyer” who advises you to transfer the deed of your home to him immediately, to keep the foreclosure from progressing. He then asks you to move out, and rents the property out, all without ever taking ownership of the home. He collects the rent until the property is eventually foreclosed on, all while still in your name.
Other dishonest buyers will offer to buy your home for only what you owe on the mortgage, or less, which eats up all your equity. They then resell the home for full price, reaping all the benefits of the payments you made in the past.
Always work with a reputable real estate agent when selling your home while in foreclosure, and clear all offers through your lender.
Refinancing your mortgage is another viable option for those who are dealing with foreclosure. This allows you to absorb your past due payments and start a fresh loan. Lenders, and scam artists posing as lenders, will begin to contact you once your foreclosure is filed.
A shady lender could offer you a new mortgage and allow you to start making payments, without disclosing the fact that the entire balance of the loan is due in a balloon payment just a few months later. This will lead to another foreclosure and the dishonest lender gaining possession of your home. Other dishonest lenders could tack on points, higher interest, and fees without telling you, landing you in hot water all over again.
Fake Loans and Identity Theft
Some phony lenders are out there who “approve” you for a mortgage and begin accepting your payments, none of which are actually paying off your home. You won’t find out you’ve been scammed until you receive notice from the original lender that you’re still in foreclosure. In the meantime, many of these lenders have taken the opportunity to gather all of your personal information and access to your accounts, making you a prime target for identity theft.
If you choose to refinance your mortgage to overcome foreclosure, do your homework and only use the most reputable lenders. Using a quick, cheap, or obscure lender can cause you more trouble than you’re already in.