How to Avoid Scams if You Face Foreclosure

If you are facing the loss of your home because you can no longer afford your mortgage it’s essential that you understand your options. As of last month, six percent of all mortgage borrowers were late with their payments nationwide. Let's put that number in perspective. If you walk a block of twenty houses bought on a mortgage, you can bet that at least one of the owners can't afford to pay his mortgage on time. Real estate money is tight, but by now banks realize that neither the homeowner nor mortgage holder wins with a foreclosure. Don’t panic. If you can’t make your payments on time, don’t duck out. Contact your mortgage holder and try to reach payment arrangement. Get a clearly detailed breakdown of the deadlines that you will face in trying to resolve this issue.

Difficulty: Easy

Instructions

1. Be wary of anybody calling herself a mortgage consultant or representing herself as being from a foreclosure service. Remember that if anybody solicits your business by door-to-door marketing or through hand delivered flyers, he eliminates the risk of being called up on federal charges of mail fraud. Research any company before doing business with it. If the pitch is too good to be true like offering to repair your credit or find a buyer within a week, it probably is.

2. Learn about the most common scams out there. The first is the simplest where you get charged excessively for light research that you could have easily done yourself on the Internet or in the local library. Worse, the information provided probably won’t save your home while it will give you a false sense of security. While getting strung along, you time to get qualified help dribbles away.

3. Know that in one scam a homeowner signs over title to her home, then agrees to rent it back from the new buyer with the oral assurance that she'll be able to readily buy it back when her economic circumstances improve. When the time comes, the terms are so onerous that she'll never get her home back.

4. Be aware of another scam. Homeowners sign documents that they think will make the mortgage current without realizing that they’ve signed over all the equity in the home. Some don’t catch on until the sheriff puts them on the street.

5. Don’t make payments to anybody except your lender. Some victims have done so to supposed foreclosure consultants only to find that their payments never reached the mortgage holders.

6. Know of another, more complex scam. The mortgage consultant will place the property’s ownership in a trust to avoid the "due-on-sale" clause that is found in most mortgages. Then the consultant transfers ownership to a front organization. The mortgage holder is left unaware while the homeowner is legally obligated to keep paying the mortgage on a house he no longer owns.

7. Be aware that oral agreements are enforceable, but notoriously difficult to prove. Make sure that every part of your agreement is in writing. Never sign a contract under pressure or one that you don’t fully understand. Much of the sub prime mortgage meltdown was caused by borrowers who didn’t realize how much their payments could go up during the life of their adjustable rate mortgages. Consult with an attorney first before signing anything. Be sure that any home sale contract that you do ink releases you from any further liability for your mortgage. Don’t sign any contract with blank spaces. Make sure that everything is filled in.

8. Make sure that you supply a translator of your choosing, not provided by the company with which you are doing business.