Mortgage Scams

---

Protect Yourself From Mortgage Fraud

---

Misleading promises to save or rescue you from foreclosure are proliferating at an incredible rate all over the United States. It is vital that you are aware of these scams in order to protect you and your family. Be sure to also read the supplemental news involving the latest and recent scams to the right of this page. Our news articles report a variety of scams ranging from short-sale, loan modification to reverse mortgages and etc.

 

If you are having trouble paying your mortgages and falling behind, you maybe subject to prey by con artists and scam artists. These unscrupulous individuals prey on vulnerable people in desperate situations. Potential victims are abundant and easy to locate due to the dire straits of the housing crisis and foreclosure ridden nation. How do these people find theirs victims?

 

1. Mortgage lenders publish notices before foreclosing on a borrower's home.
2. Private companies compile and sell a list of these foreclosed properties including distressed borrowers.

 

Con artists or scam artists with devious intensions scour these notices and target their victims in person, mail, telephone or via email. It is also common for these unscrupulous individuals to advertise on the television, radio, the world-wide-web (internet) and including newspapers. Often, they call themselves foreclosure consultants, mortgage consultants offering foreclosure prevention services or foreclosure rescue services. Most of them take advantage of desperate homeowners seeking to save their homes from foreclosure.

 

Be wary when someone offers to charge you a fee for helping to negotiate a loan modification, stop or delay foreclosure on your home. Ensure to check his or her credentials, reputation, experience and stay alert for any signs of a potential scam. It is always best to maintain a close relationship with your lender or mortgage servicer. Your mortgage lender is very likely to help you find solutions to avoiding foreclosure. It is vital to contact your mortgage lender early to take advantage of the variety of solutions and options available. The best solution is to work with legitimate consumer financial counseling agencies that can help mediations with your lender.

 

The Office of the Comptroller of Currency (OCC) has issued a Consumer Advisory illustrating most popular scams suggesting ways for homeowners to protect themselves. They have also enlisted 10 red flags of a mortgage modification scam.

 

POPULAR TYPES OF SCAMS

 

Here are some examples of popular scams involving loan modification and avoiding foreclosure. For more recent fraud activity, we have provided recent stories published on the right side of this page.

 

Refinance Fraud

 

The scam artist will offer to act as an intermediary to negotiate a loan modification or a repayment plan with your lender and in many instances will guarantee that he or she will save your home from foreclosure. You will be requested to make direct payments to the fraudster including some up front fees so he can forward these payments to your lender. The scammer will also advise you to stop making payments and communicating with your lender. The fraudster may actually be pocketing your mortgage payments leaving you in a far worse situation.

 

Always remember that contacting your lender is the first thing you should do in finding solutions to help you avoid foreclosure. Your 2^nd best option is to contact qualified and approved credit counselors.

 

Fake Government Modification Programs

 

Be on the watch for people who claim to be affiliated with or approved by the government and requesting you to pay an outrageous upfront fee in order to qualify for the government modification program. Be aware that you are not required to pay anything to take advantage of the government programs. In order for you to participate, you will only need to contact your lender or loan servicer.

 

Note that scam artists' website can be replicated to look very similar to those belonging to government agencies. Con artists may use legitimate terms such as 'federal', 'TARP' or other terms to lure potential victims by giving you an in-genuine impression that they are approved or affiliated with the government.

 

The U.S. government is making efforts to crack down on more fraud but it is vital for you to take precaution so as to protect yourself from falling victim. Be suspicious of slogans such as 'government-approved' or 'official government' loan modifications. Your lender should be able to tell you whether you qualify for any of the government initiatives to avoid foreclosure. You are not required to pay anything in order to participate in these programs.

 

Leaseback or Rent to Buy Scams

 

In this sort of scheme, you will be requested to transfer the title to the con artist who will apply for new and improved financing. In exchange, the scam artist will allow you to remain in your home as a renter with the option of buying it back. If you break any of the rules within the terms of the rent-to-buy agreement, he or she will evict you and you will lose your money. The rent-to-buy agreement may be very difficult to comply as it may require a very expensive deposit followed by high monthly payments designed to make you default on the agreement. In essence, your new landlord or con artist may have no intention of selling the house back to you. They are only interested in your money and keeping your home.

 

Please note that once you transfer the title to someone else, you will no longer own the home but you are still obligated to make payments on your debt. Transferring your title to someone else does not mean that your debt will disappear or even transferred to someone else.

 

If mortgage payments are not received by your lender, they have the right foreclose your property. As a result, foreclosure and other undesirable details will surface on your credit report.

 

Bankruptcy Myth

 

While filing for bankruptcy does stop foreclosure, it is only for temporary. The bankruptcy filing temporarily stops any debt collection and foreclosure proceedings while the court administers your case. You must eventually continue to pay mortgage payments to your lender or else they can foreclose your home. Bankruptcy is not a permanent answer to stopping foreclosure on your home. The consequences of filing for bankruptcy are that it will remain in your credit report for as long as 10 years including a drastic dent on your credit score.

 

Debt Elimination Schemes

 

Con artists may claim to tell you that they are able to extinguish your debt by informing you of invalid legal arguments to make you believe that you are not legally liable to pay back your debt or mortgage. They will provide you with invalid information about unproven laws and finance often known as 'secret laws' to extinguish debt. Some will also claim that the banks do not have the legal authority to lend money. Do not fall victim for these bogus claims and use this as a basis for not paying your mortgage.

 

How to avoid falling prey to illegitimate Schemes

 

Stay alert and proceed with caution whenever someone offers to help you prevent foreclosure.

 

1. Contact your lender or mortgage servicer. Request to speak to someone in the loss mitigation department and inquire about mortgage modification options and other alternatives to avoid foreclosure.

 

2. Make direct payments to lender or mortgage servicer. Avoid trusting anyone to make your mortgage payments for you. Do not make your mortgage payments to anyone other than your lender or mortgage servicer. Do not stop making mortgage payments if advised by someone other than your lender or mortgage servicer.

 

3. Foreclosure Consultants Beware. Do not pay any up-front fees. Some legitimate housing counselors will charge a modest fee for their services. Avoid paying any up-front fees to any other third-party counselors prior to receiving any services. In the past few years, there has been much fraud performed by individuals advertising themselves as foreclosure consultants and demanding up-front fees. Many victims were left stranded after losing their money and did not receive any help or achieve any improvement to their situation. The U.S. government has outlawed individuals or organizations offering foreclosure consulting services with up-front fees. To raise the bar, many states will require individuals to post a $100,000 surety bond prior to registering as a foreclosure consultant. In addition, only individuals with a real-estate license or a lawyer are legally allowed to provide professional foreclosure consulting services. It is important for you to know who you are dealing with. Check their credentials and reputation even if they claim to be a real-estate agent or lawyer. Scam artists have also been reported to recruit lawyers in their joint-venture.

 

4. Read The Fine Details Before Signing. Make an effort to read every document before committing to signing it. Avoid relying on a verbal explanation of the agreement by someone else or a third party. Ensure that you understand everything in the document otherwise it may legally obligate you to something that is undesirable such as agreeing upon ownership of your home to someone else. Do not sign documents that contain blank spaces allowing anyone to fill it at a later time. Do not sign any documents that contain errors or false statements even if they promise you that they will correct it at a later time. If the document is too intricate beyond your comprehension, please consult legal advice from a trusted lawyer or a legitimate, trusted financial counselor.

 

5. Avoid Signing Your Deed To Someone Else Without Consulting Your Own Selected Lawyer. Foreclosure fraud often involves transferring your homeownership or deed to the unscrupulous scam artist or another third party. The scam artist may introduce you to a lawyer or consultant of his choice. Avoid trusting anyone other than your own selected and trusted lawyer, financial consultant and credit counselor. Once you sign the deed to someone else, you lose ownership rights to your home including all the equity you have accumulated through out the years. After all this, you are still obligated to pay your mortgage debt.

 

6. Avoid Verbal Agreements And Get Them In Writing. Verbal agreements and promises are normally not binding in a legal court. Protect yourself by obtaining a written agreement or contract by the person who is making the promise even if they suggest it is not necessary. Store copies of all signed agreements and as a reminder, never sign anything you do not comprehend.

 

7. Report Suspicious Activity To Relevant Federal Agencies. Take action and report any suspicious activity to the Federal Trade Commission, your state and local consumer protection agencies. Doing so will help prevent other victims from being scammed. Reporting will also open up an investigation so that the perpetrators be caught and arrested. If you have a complaint or question regarding with an unresolved matter with a national bank and you cannot resolve it directly with your bank, contact OCC's Customer Assistance Group by calling 1-800-613-6743. You may also send them an email at customer.assistance@occ.treas.gov or by directly visiting www.HelpWithMyBank.gov

 

Signs & Indicators of A Mortgage Modification Scam. If you hear of anything similar to the following below, it's a scam.

 

1.      Pay us $1,000 and we'll save your home. Few legitimate housing counselors will charge a modest fee for their services. However, fees that range in the thousands of dollars are likely to be a red flag and obvious sign of a potential scam especially if they are required up-front or before they have performed any services for you. Beware of organizations that require you to pay them in the form of a cashier's check or a wire transfer prior to them performing any services for you.

 

2.      I guarantee I will save your home. Trust me. Stay clear from anyone or organization who provides a guarantee or promise to save your home from foreclosure or allow you to remain in your home. In the real world, there are no guarantees. Unrealistic claims may sound hopeful for desperate homeowners seeking a way out or solutions to saving their home. Unrealistic promises are a sign that the person is either interested in your money or your home.

 

3.      Sign over your home and we'll let you stay in it. Beware of individuals offering you a solution by proposing to pay your mortgage in exchange for your ownership title. They will propose that you sign the deed of the house over to them and in exchange allow you to pay rent. Once you sign over your house to them, they have the power to raise your rent, evict you and sell your home. At the end of the day, you will lose your home and still be legally liable to your lender for the mortgage debt.

 

4.      Stop paying your mortgage. Do not pay attention to anyone requesting you to stop paying your mortgage even if they suggest that they will pay the mortgage for you.

 

5.      Do not communicate with your lender. Although you are liable to your lender for the mortgage debt, it is in your best interest to stay in contact with them in regards to exploring possible solutions to saving your home. This way, they can be aware of your unique financial situation. Your lender should be your priority and first contact for negotiating a short-sale, repayment plan and a loan modification.

 

6.      Your lender did not have the authority to make the loan. Pay no attention to anyone claiming that they can help you use 'secret laws' or 'secret information' including hidden provisions of the U.S. constitution to help extinguish your debt and make your mortgage debt invalid. These unproven arguments are used by scam artists in hopes to prey on desperate homeowners with the goal of making you believe that you are not obligated to pay your mortgage.

 

7.      Just sign here and we will fill in the blanks later. Take your time to read everything you are presented and do not hesitate to consult a trusted lawyer before signing anything you do not understand. Do not allow anyone to fill in the blanks or other paperwork for you at a later point. Beware of anyone pressuring you to sign something that you are not comfortable with or anything you do not fully comprehend.

 

8.      Contact 1-800-Fed-Loan. Scam organizations have been known to use deceptive tactics tricking you into believing that they are affiliated or approved by the government. Once you are convinced, they will request for you to pay high fees in order to qualify for the government modification program. Bear in mind that you are not required to pay any fees to participate in any legitimate government program. The answer is to contact your lender and they will help determine if you qualify.

 

9.      Keep your home by filing bankruptcy. Filing bankruptcy only puts a temporary stop to your lender foreclosing your home. Once you cease to make any mortgage payments, the bankruptcy court will permit your lender to foreclose your home. Beware of con artists who will file bankruptcy under your name without your consent or knowledge. They do this behind your back to give you a false impression that they have successfully negotiated a new payment agreement with your lender thus helping you stop foreclosure. In reality, filing for bankruptcy only puts a temporary halt before the bank eventually forecloses your home as authorized by the bankruptcy court.

 

10.  Why haven't you replied to our offer? Do you want to live on the streets? If an individual or an organization is pressuring you, it doesn't seem right. High pressure sales tactics are red flags and indicate a potential scam. If someone keeps contacting you similar to the approaches of a telemarketer and insist that you work with them to avoid foreclosure on your home, ignore them. Keep in mind that legitimate housing counselors do not do business this way.