Be Cautious of Foreclosure Scams

12 August 2008

Author: admin Posted under Foreclosure Crisis

It is a known fact that the foreclosure crisis experienced nationwide has resulted to the millions of homeowners having trouble with their mortgage payments. Sadly, the current mess in the mortgage industry has also given rise to an increase in foreclosure-related scams committed by con artists.

For this reason, government officials are warning the public about these foreclosure rescue scams which usually targets homeowners on the verge of losing their homes to foreclosure. Considering their desperation and frustration, it is not surprising that they will believe the promises of these con artists.

The most common foreclosure scam is the one which involves the homeowner paying an upfront fee ranging from $1000 to $10,000. The said fee is payment for the rescue company’s help in negotiating with the lender. Once the homeowner pays, the company disappears.

Another common scam involves the signing over of the property to the fake foreclosure rescue company by using methods of confusion of persuasion. Homeowners are lead to believe that they are signing an application for a new mortgage or other documents that could stop foreclosure supposedly. Unfortunately, once the property ownership has been transferred, the con artists will be free to use whatever equity is left in the property.

These foreclosure scams have increasingly become common as the national foreclosure rate soar to record levels. In the last two years, almost 3 million homes entered some stag of foreclosure, effectively causing home prices to decline and home sales activity to slow down.

Scam artists lure troubled borrowers into their scheme thru advertisements like “Stop Foreclosure Today” seen on the television or read on newspapers. The distressed borrowers have actually no way of verifying if the company is legitimate or not. This kind of ignorance will usually be the quality that the scammers will be zeroing in.