When going through a foreclosure, it is natural for any homeowner to panic and resort to any solution that allows them to keep their home. You may encounter some people who will label themselves to provide mortgage or foreclosure relief to homeowners in distress. But in reality, they are scam artists with the intention to make profits from your financial misfortune. They will make big promises that they will reduce payments or even pay your mortgage and guarantee to save your home. Some might even go to the lengths of claiming to be working with your mortgage lender.
It is essential that you know about the types of foreclosure scams to keep yourself safe from losing your most valuable assets to con artists and fraudulent companies.
1. Lender Scams
When you receive the foreclosure notice, a lender may contact you and suggest refinancing your mortgage loan with lower payments. The offer will seem very attractive to you because in the beginning you will have to make significantly low payments, as you will be paying the interest amount only. When the term ends, you realize that the actual amount you borrowed is still outstanding in the form of a balloon payment. If you are unable pay off that entire balloon payment, you may have to give up your home to the lender.
2. Equity Skimming
Equity skimming is another common technique that most homeowners fall prey to. In this scam, an individual approaches you claiming to be a buyer. They promise to pay off your mortgage and give you a lump sum amount when your house is sold. The buyer will ask you transfer the property deed to them, move out, and break off any communication with your lender.
The buyer will most likely rent out your home and collect monthly rental payments for several months. During this period, they won’t make any mortgage payments and since you have severed all forms of communications with your lender, they will not be able to inform you about the missing payments. This will allow your lender to foreclose your home, as transferring your property deed to another party does not means that you are relieved of the obligation on your loan.
3. Fraudulent Counseling Agencies
After you have been issued a foreclosure notice, you may start receiving calls from phony counseling agencies that may claim to provide you with ways to save your home. They will ask you to pay exorbitant upfront fees for their ‘valuable’ services. However, in reality, all they do is make a few calls and complete paperwork involved in getting a repayment plan approved from your lender, or may work to organize a short sale. But, all these activities can be easily performed by a homeowner, without incurring any additional costs. These counseling agencies mislead homeowners and keep them from getting real help.
Since homeowners are desperate to keep their property from being foreclosed, scam artists tend to take advantage of their situation. It is recommended that you discuss your case with an experienced foreclosure defense attorney and know what options are available to you. For more information, contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today.