How to Avoid a Foreclosure Scam

Avoid a home foreclosure scam by looking for specific warning signs from potential scam artists. Since May 2008, foreclosure scams have been increasing at an alarming rate. If you are having difficulty paying your mortgage, be wary of potential scams. There is legitimate help out there to help you through a difficult time. This article will help you avoid a foreclosure scam and help you find real assistance.

Difficulty: Moderately Easy

Instructions

1. 
    

   Avoid responding to the following types of potential scams. These potential scams will contain language in their offers or claims such as:
   
   Terms like "federal" or “TARP” modification programs
   
   Foreclosure “rescue” and refinance
   
   Leaseback/rent-to-buy
   
   Debt-elimination including use of “secret laws”
   
   Declare bankruptcy to stay in your home

2. 
    

   Before responding to any offers, call your mortgage lender and ask for someone in their loss mitigation department. Ask the loss mitigation specialist about mortgage modification options and other alternatives to foreclosure. Your lender will benefit if they can avoid foreclosure. The average foreclosure in the United States results in a $50,000 loss for the lender.

3. Always pay your mortgage lender directly. Never pay a third party and trust them to make your payment in your behalf. If a third party insists that you need to pay them, then a large red flag should be waived and you should immediately contact your lender.

4. 
    

   Never sign over your deed or title without first consulting with an attorney you trust. Be cautious before signing anything, make sure you read everything in the contract. If you do not understand the contract hire an attorney or have someone you trust who is familiar with real estate contracts read all the terms. Make sure everything that has been offered to you is in writing.

5. 
    

   If you decide to work with a mortgage councilor, never pay anything up front. Always make sure that you have a written offer in front of you that is available for review. Only agree to pay a reasonable fee if the offer if beneficial.

6. 
    

   If it sounds too good to be true, it probably is. Check with your State's registered lenders list. If the lender is not registered in your state then something illegal is probably occurring. Report suspicious offers to your state and local consumer protection agencies or the Federal Trade Commission. Avoid foreclosure scams when it comes to your mortgage.

Tips & Warnings

• To find a legitimate housing or financial counselor, contact the U.S. Department of Housing and Urban Development (HUD) at [phone] or [phone], or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.
• Call (888) 995-HOPE, to reach a nonprofit, HUD-approved counselor through HOPE NOW. HOPE is a cooperative effort of mortgage counselors and lenders to assist homeowners.

[skyedanzer]

on 6/1/2009 Great info!