Foreclosure Scams Up: Advice Worth Reposting

ABC News has just posted a new story about the rise in foreclosure scams. Because of the tanking housing market and rise in unemployment, more homeowners are being targeted by and falling victim to foreclosure scam artists, and are losing their homes at an alarming rate.

I had published a series of blogs a few months ago about some common scams and how to protect yourself from them. This week on Foreclosure Exposure Radio, we will go over scams in detail for the entire hour, but in the meantime, I am reposting the following entry:

As soon as news of your foreclosure is made public, the flood of letters and phone calls begin, and the vultures are on the hunt. Some of them are less polished with their approach: you may receive a sloppy letter offering to help out by buying your home. Others may call you on the phone (ignoring the “Do Not Call List” rules and regulations) or even knock on the door and offer their services. These are the amateurs – probably fresh out of a beginning real estate investor class. They can be safely disregarded.

The dangerous ones are the Vultures in Sheep’s Clothing.

These are the slick, polished “professionals” who offer to assist you. They will hand you a savvy business card, listen intently and console you over a cup of coffee or glass of water at your kitchen table, all the while assuring you that they’ll stop your foreclosure regardless of your situation. Heck, they’ll even promise to let you stay in your home! All you have to do is sign on the dotted line...

Does that sound familiar? Unfortunately, this promise, in some instances, is too good to be true. Don’t ignore your inner sense of protection – if it sounds too good to be true, it could be a scam designed to steal your equity.

While some of the solutions presented are valid options in certain instances, some investors have no intention of letting you stay in the property – at least, not for very long. Read the contracts they present – they are heavily weighed in their favor, and the slightest infraction on your part will let them evict you and walk away with your property and your equity (especially in landlord-friendly states!).

Carefully investigate all offers presented to you. Solutions that sound too simple or too good to be true usually are.

If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial situation. Financially or emotionally distressed homeowners often become the unwitting victims of unethical practitioners who seek to exploit the misfortune of others.

There are several precautions you can take to avoid being taken advantage of:

• Don't sign any papers you don't fully understand.

• Make sure you get all "promises" in writing.

• Beware of any loan assumption where you are not formally released from liability for your mortgage debt.

• Check with a lawyer or your mortgage company before entering into any deal involving your home.

• If you are selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.

Again, read any contracts presented to you. An upstanding investor should not have a problem allowing you take a day or two to review the documentation with a professional. If they are pushing you to sign right now, it could be a scam.