Avoiding Foreclosure Scams
Once the lender files a “notice of default,” your mortgage troubles become public record. Scammers, predatory lenders and other con artists keep their eyes open so they can prey on homeowners in trouble.
Here are just a few of the scams and schemes to look out for:
Predatory refinance loans. Unscrupulous lenders often come to the “rescue” with an offer of a loan that will supposedly get you out of financial difficulty and help you keep your home. In reality, many of these loans include terms and fees that are almost guaranteed to get you deeper in debt. When that happens, the lender is often ready to quickly foreclose on your home.
Flipping. These same lenders rake in hefty fees by convincing homeowners to refinance over and over again, even when it is not in their best interest.
Foreclosure prevention scams. These “specialists” and phony counselors, who say they’ll keep you out of foreclosure for a fee, are scammers trying to get your money with no intention of providing the promised services. At the very least, they typically charge high fees for something you could do yourself or with the help of a free or low-cost HUD-approved housing counseling agency.
Equity skimming. Be wary of buyers who contact you out of the blue and offer to pay off your mortgage or sell the home if you deed the property to them. They may even offer to have you rent the home from them. Remember, a mortgage loan always remains in your name until you pay it off or the lender allows another individual to assume the loan. Deeding your property to another person doesn't change this. Equity skimming scams are designed to take advantage of uninformed homeowners. Often, the victims don't realize they are giving away their property and equity.
If you think that you are being targeted by a predatory lender or other scam artist, contact:
- A HUD-approved housing counselor.
- Homeowner's HOPE Hotline or by phone at 888-995-HOPE.
- The Federal Trade Commission.
- Your state’s consumer protection office. In Georgia, go to the Georgia Department of Law's Consumer Protection Unit website.
This brochure was created by Consumer Action’s Housing Information Project. © 2007 Consumer Action. Rights Reserved.