It is clear that anyone facing the possibility of foreclosure on their home is in serious financial distress. People in these situations are susceptible to undue influence and can be easily misled into making bad decisions. It’s a sad but true fact—there are many unscrupulous third parties who won’t hesitate to take advantage of someone desperately seeking a way to save their house or at least some of their finances. If you are facing foreclosure, here are some things to look out for when seeking professional assistance:
Scams come in many forms
Foreclosure scams, also known as “rescue scams,” come in many forms. The most common involve what companies call “mortgage relief services.” They say they’ll help you refinance your mortgage in a timely fashion, so that a foreclosure sale doesn’t take place out from under you. For this alleged service, they charge a huge fee (and sometimes additional fees for “operating costs”), with the promise that the homeowner will walk away still owning the property and with a refinanced mortgage and all of their missed payments cleared up.
Sound too good to be true?
In the vast majority of cases, it is. What generally happens in these cases is … nothing ever gets done. The company that made such lifesaving promises collects its fee and then basically does nothing, never returns calls, etc. This goes on until the house goes into a foreclosure sale, at which point the former homeowner is simply out of luck. And just try to get a refund . . .
Another common scam involves a title transfer, where the foreclosure relief company requires you to turn over title (ownership) of your house either to them or to some other third party. You’re permitted to stay in the house as a tenant (renter) and, so the promise goes, with the plan to eventually buy back the property once the mortgage issue has been resolved.
The problem is, once you turn over the title, these companies routinely arthritis provide nothing in writing that validates this supposed agreement. Generally speaking, the title transfer process ends up with the third party claiming they were unable to save the house or that they now own the property outright, with no recollection of any alleged agreement with you. If they want, they can sell the house themselves (they’re now the title-holders, after all) or they can open a home equity line-of-credit or other loan against the property, and take out any equity from the property. The end result – you lose any anticipated equity and, if you’ve been staying in the house as tenant, you’ll likely be evicted as well.
How can you avoid falling prey to schemes like these?
The office of the California State Attorney General offers helpful tips, including these:
Never transfer title or sell your house to a “foreclosure rescuer.”
- Do not make mortgage payments to anyone other than your approved lender or loan service.
- Do not sign documents without carefully reading them first. Homeowners believe they’re signing a document for a new loan or a loan modification. They learn later that they’ve transferred ownership of their home to someone who is now trying to evict them.
This is great advice, but I want to add that you should always contact a lawyer before approaching any business promising foreclosure relief or responding to such a solicitation. Believe me—these companies have no accountability. They won’t think twice about taking your money and then disappearing.
If you’ve already become a victim of such a scam, it’s not necessarily too late to take action. A lawyer knowledgeable in this area can still take steps to help remedy the situation.
Are you in need of legal assistance regarding debt relief options or have any questions regarding the above topic? The Law Offices of Ian S. Topf offers a free consultation in a variety of issues, ranging from bankruptcy, debt collection defense, estate planning, family law, as well as DUIs and civil matters.