Scams with Home Loan Help

With home loan foreclosures up and consumer credit problems much more prevalent, a number of businesses have cropped up that do nothing but take advantage of homeowners that are under duress and seeking financial relief.  These firms are fundamentally scam organizations.  The sales pitches from these organizations can sound like a way for a home loan borrower to get out from under their troubles and their delinquent mortgage payments but often these people are in business just to take the homeowner’s money.  Just plain old scam organizations preying on homeowners that have fallen behind on their mortgage payments and looking for a legitimate way out or guidance in the right direction.

The office of Housing and Urban Development has provided information on a variety of specific scams that these organizations have engaged in recently.  Three scams that were highlighted include:

The foreclosure prevention specialist.  With theses scams, the foreclosure specialist is far from a specialist.  They are really just fake home loan counselors who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself.  Often, the result is that none of the actions provided by these alleged counselors will have the outcome of saving the home from foreclosure.  These scams give the homeowners a false sense of hope and delay them from seeking qualified help for their mortgage loan problems.  In addition to paying unnecessary fees to the scam artist or company, the homeowner is also exposing their personal financial information to a fraudster that may lead to further financial trouble.

Some of these companies involved will even use names of government programs to try and legitimacy to the scam with the words HOPE or HOPE NOW in them.  These are just more refined scam artists who are attempting to dazzle and confuse borrowers who are looking for assistance from the actual assistance that can be found for free at the 888-995-HOPE hotline.

The lease/buy back scam.  In these scams a homeowner who has a mortgage that is severely past due may be deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back under certain terms.  Usually, the terms of the buyback in this scheme are actually so hard to meet that the buy-back becomes near impossible, which ends with the homeowner getting evicted, and the lease/buy back operator walks off with most or all of the equity in the home.

The bait-and-switch:  In a bait and switch scam, the homeowner is led to believe they are signing documents to bring the mortgage loan current.  Instead, they are signing a number of legal looking papers that includes signing over the deed to their home.  The scam artist then sells the home and the homeowner usually doesn’t know they’ve been scammed until they get an eviction notice from the new homeowner or mortgage lender.

Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

Unfortunately, during tough economic times more of these unprofessional organizations surface to make a quick a buck of those home owners that are having mortgage payment troubles and are under duress.  There are a number of for-profit companies that contact homeowners that have delinquent mortgage loans promising to negotiate with the mortgage lender.  While these may be legitimate businesses, they often charge you a significant fee for information and services that the homeowner’s mortgage lender or a HUD approved housing counselor will provide free if they are contacted instead.

Homeowners in trouble don’t need to pay fees for foreclosure prevention help; it is a better decision to use the money that would be paid to these organizations to pay the mortgage instead. 

The office of Housing and Urban Developments reminds borrowers that if it sounds too good to be true, it may well be a scam that will damage the borrower’s credit and cost more in the long run.  Working directly with the mortgage lender, home loan servicer or a legitimate non-profit organization is the best approach for troubled borrowers.

For homeowners that are unable to make their mortgage payment, don’t ignore the problem any further.  The further behind in the mortgage loan payments a borrower becomes, the harder it will be to reinstate the home loan and the more likely that they will lose the house.  There is a lot valuable information available regarding foreclosure prevention or loss mitigation, be sure to check that you are working with a reputable organization or directly with your mortgage lender before going forward.