Protecting Yourself from Scams
A Foreclosure Rescue Scam is when a thief pretends to 'Help' people in foreclosure but is really trying to steal their money. There are many different types of scams and there are more scam artists than legitimate counselors. Once you are in foreclosure, your name, address, and the fact that you are desperate to save your home are public information. Scam artists send you a piece of mail or call you and promise to 'save you from foreclosure' or to 'solve your problems.' But, beware! They are out to get what little money you have left. If you want to stay away from scam artists, read on!
The Types of Rescue Scams
The 'Pretend to help you' scam is where they tell you that they will call your lender for you. All you have to do is give them money and relax. Don't fall for this! You'll know that it's a trick when they tell you to:
- Ignore your lender's phone calls
- Ignore any Court date that you have
- Don't try to contact an attorney
You'll know that this is a scam because they'll ask you to pay them. But hold onto your money! Legitimate housing counselors offer their services for free. Once you are in foreclosure, you need to save your money, in case your lender wants a down payment. If someone offers to help you out of foreclosure, only if you pay them first - tell them to get lost!
The 'Let us review your documents for a thousand bucks' scam is where they ask you to send them your mortgage papers so they can "review" them to see if you have any legal claims. Then, they'll send you a very long letter that quotes a lot of law, but isn't worth the paper it's printed on. It is true that an attorney might ask you to send him/her your documents for review. But, there are a few differences that you should look out for. First, an attorney will not ask you to send them money, UNLESS they agree to take your case. Legitimate document reviews are absolutely free. Second, these scam artists are rarely attorneys. Most counseling agencies work with local attorneys to help folks in foreclosure. Call someone local and hold onto your money!
The 'Deed your house and rent it back' scam is where someone convinces you to sign your deed over to them, so they can save you. "Don't worry," they'll say. "You'll just pay us rent, until your credit is fixed. Then you'll buy the house back." It all sounds good. Until they either borrow a ton of money from another bank (using your house as collateral) or raise the rent quickly and then kick you out. Unless you are selling your house, do not sign your deed over to anyone! If you want to keep your house, call a local legitimate counselor and make an appointment.
The 'Quick Refinance' scam is when they promise that they have a lender who can help you out of this, no problem! What they don't tell you is that if a foreclosure has been filed against you, nearly all lenders will refuse to give you a new loan. There is no quick fix for someone in foreclosure. If a fast-talker contacts you and pretends that there is, call 2-1-1 for help first!
The 'Filing Bankruptcy will save your house' scam is where someone convinces you to file bankruptcy because this will stop the foreclosure, or they will convince you to deed the house to somebody else so THEY can file bankruptcy and stop the foreclosure case. It is true that bankruptcy will stop foreclosure. But, only for the time being. But, if you file bankruptcy before you meet with a legitimate bankruptcy attorney, the foreclosure will start up again and you will lose your house. Since bankruptcy will stay on your credit report for 10 years, you should be very careful about whether to file. Before choosing bankruptcy as an option, meet face-to-face with an attorney.
How to Protect Yourself From Scams
These simple rules will help protect you from Foreclosure Rescue Scams:
- Only make payments directly to your lender or servicer. Do not pay a counselor money. Only pay your lender, after you have a written agreement. It is OK to pay your lawyer for his/her escrow account.
- Never sign over your deed. Unless you are selling your house. There is no reason to sign over your deed to someone else. This will never get you out of foreclosure. It will make you lose the house.
- Get promises in writing. Scam artists pretend that they are talking to your lender. Make them show you a written agreement from your lender, before you pay anything.
- Do not give out personal information. The fact that you are in foreclosure is public information. Some scam artists call people in foreclosure, just to get their personal information. Don't give anyone who calls you any personal information.
- Know what you are signing. Scam artists know that people in foreclosure will sign anything if they think it will help. Don't make this mistake! Refuse to sign, unless a counselor or an attorney can explain it to you. If they won't let you "show it to your attorney" or "think about it overnight," you should refuse to sign!