Finance Globe

U.S. financial and economic topics from several finance writers.
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Watch Out for Foreclosure Rescue Fraud

Record numbers of foreclosures in the U.S. have presented scam artists with an opportunity to take advantage of desperate homeowners when they're already down.

The Federal Trade Commission issued a warning to consumers about crooks promising to help troubled homeowners avoid foreclosure. These scams can be very elaborate and seem legitimate to the unsuspecting homeowners.

Then the crooks disappear with the homeowner's much-needed cash by the time they realize that the scam artist has done nothing to save their home.

How the Scams Work
Scam artists may track down their victims by checking public foreclosure notices in the paper or on the internet or through public files at government offices, and then send a personalized letter directly to the homeowner. Some scammers run ads in the paper, on the internet, on TV, or put up signs on telephone poles and at bus stops, or they may send out fliers or business cards.

But no matter how they get your attention, their message is always the same,

"We guarantee to stop your foreclosure."

"We have special relationships within banks that can speed up the approval process."

"We can save your home. Guaranteed. Free consultation."

"Keep your home. We know your home is scheduled to be sold. No problem!"

Once you respond to their fraudulent claims, they may use a variety of tactics to take your money:

Phony Counseling or Phantom Help
In these situations, the crook promises to help you negotiate with the lender to save your house. The scam artist will tell you not to contact your lender, your lawyer, or a credit counseling agency, and to let him handle all the details. Once you pay the fee, the scam artist disappears with your money.

In an even bolder move, the crook may insist that you pay him the mortgage payment while giving him "time to negotiate with the lender." He may collect several mortgage payments before disappearing with your money.

Bait and Switch
The crook may promise that they can get you approved for a new loan that will bring your mortgage payments current. This is a trick; the documents they present for your signature will surrender the title of your house to the scam artist in exchange for a "rescue loan."

Rent to Own Rescue
The predator convinces the homeowner to sell the home to them and become a renter for a few years. They'll tell you that by surrendering the title to the home you can fix your credit and get financing for a better loan at a later time.

But the trick is that they may make it so difficult to buy back the home that it will never actually be possible. Or they may increase your rent repeatedly, until you can longer afford to live there. Once they evict you for inability to make your rent payment, they will sell your home for a tidy profit.

Help You Sell Your Home
The scam artist will tell you they can help by finding a buyer for your home if you sign over the deed and move out, promising a share of the proceeds when the house is sold.

When you move out, they rent the house to someone else and pocket the rent payments while the lender proceeds with the foreclosure.

Bankruptcy Foreclosure
The scam artist will tell you that you they can stop the foreclosure process by contacting your lender for a refinance. They take their up-front fee, never contact the lender, and file a bankruptcy in your name, sometimes without you even being aware of it.

The foreclosure process will be suspended once the bankruptcy is filed, but it's only temporary if you don't make it to the first meeting with creditors. If you are unaware of it and don't show up, the bankruptcy will be dismissed and the foreclosure proceedings will continue.


Red Flags of a Scam - Stay away from any business that:
  • Guarantees they can stop foreclosure, no matter what your circumstances
  • Instructs you not to contact the lender, an attorney, or a credit counseling agency
  • Collects fees before providing any services
  • Accepts payments only by cashier's check or wire transfer
  • Encourages you to lease your home so you can buy it back from them
  • Tells you to send the mortgage payments directly to them, rather than to your lender
  • Tells you to transfer the property title or deed to them
  • Offers to buy your house at a fixed price without using current market data to set the price
  • Offers to fill out paperwork for you
  • Pressures you to sign documents that you haven't read or don't fully understand
Finding Legitimate Help The first thing to do if you are having trouble making your mortgage payments is to contact your lender. You may be able to negotiate a repayment schedule to catch up with your payments.

The foreclosure process is costly for lenders and they generally would rather work something out with the borrower than to foreclose on the property.

Also, you can contact a credit counselor at the Homeownership Preservation Foundation (HPF), a non-profit organization that operates the national hotline at 1(888)995-HOPE begin_of_the_skype_highlighting 1(888)995-HOPE end_of_the_skype_highlighting to help troubled homeowners with personalized assistance to avoiding foreclosure. This is a free, bi-lingual service and they take calls 24/7. HPF is a member of the Hope Now Alliance of mortgage servicers, mortgage market participants, and counselors. More information can be found about Hope Now at www.995hope.org.

Report Fraud
If you believe you've been a victim of foreclosure fraud, report it to the Federal Trade Commission, your state Attorney General, and your local Better Business Bureau.





Source:
The Federal Trade Commission
Avoiding Overdrafts and Bounced Check Fees
The Debt Snowball
 

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Tuesday, 20 August 2019

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