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Foreclosure Rescue Scams Preying On Homeowners

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August 17^th, 2009

 

If someone other than your own mortgage company comes to you and claim that they can help you modify your mortgage, walk away in the opposite direction. In most cases, it’s a scam.

 

State attorneys general and the Federal Trade Commission have been recently very busy going after bogus foreclosure rescue businesses taking advantage of innocent troubled borrowers.

 

With foreclosures at record levels, it has attracted a lot of fraud and many similar schemes have surfaced since 2005. According to RealtyTrac Inc., there were 360,149 foreclosure related filings in the month of July. This number represented about 7% more than June and about 32% more than last year.

 

In New York, one of the biggest foreclosure rescue firms in the United States was accused of taking large upfront money from innocent troubled borrowers and ended up doing little or nothing to aid homeowners. Andrew Cuomo, New York Attorney General filed suit against a Long Island based company called American Modification Agency Inc. The company was engaged in deceptive business practices and false advertising. Similarly with many other fraudulent companies, they were accepting large deposits upfront and doing little or nothing to aid troubled borrowers.

 

There is another more drastic fraudulent scheme out there. It has been reported that some foreclosure rescue firms persuade homeowners to sign their property over to the company. In exchange, the company rents it back to them for an exorbitant rate they can’t afford. When the ex-homeowner finally fall behind in rental payments, the company evicts them and takes possession of their home.

 

Some companies even ploy upon the victim’s religious beliefs by sending fake pastors to addresses that are subject or close to foreclosure. Some firms tell their customers to not make any payments towards their mortgage giving them the impression that it will be modified soon. This eventually put the troubled homeowner further behind in payments and instead, eventually accelerated foreclosure proceedings.

 

There are also stories of fraudulent firms targeting Spanish speaking families and intentionally had them sign an agreement in the English language, which they did not fully comprehend.

 

 

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