How to Avoid Mortgage Foreclosure Scams

The United States is currently undergoing a nationwide foreclosure epidemic. There are more families losing their homes now than at any time in our history. Unfortunately, there are also more people looking capitalize on the misfortune of others as well.

You see them quite often, the little roadside signs stating that by calling a certain phone number, you can save your home from foreclosure. For some homeowners in trouble, this brief glimmer of hope is often all they have to hold on to. But the purveyors of this "helpful" service are often scammers looking to benefit from your hardship. Here are a few popular scams that homeowners in foreclosure often become victim of.

  • When you call the phone number on the sign, the person on the other end will set up a meeting with you. This person will offer to buy your deed from you for a few thousand dollars. Once you sign the deed over to him, he will allow your home to go to sheriff's sale.

    If you had a lot of equity in your home, often, the sale price will be higher than the amount owed on the original loan. If this happens, the owner of the deed gets the surplus money (the money left over after all the back payments and taxes are made). The crook walks away with all of the equity you've built into your home and you get nothing.
  • In another variation of the "surplus money scam," the scammer will tell you about the surplus money up front. Then, he will tell you how you cannot file a claim on your own and how particular the application and process is. The scammer will offer to do all the paperwork for you for a fee. In most cases, the "fee" ends up being 75 percent or more of the surplus money!

If you are in dire straights and you're looking for a way out of your financial crisis, here are a few questions to ask yourself before accepting the help of an individual or agency.

  • Is the individual or agency asking for payment up front?
  • Is the individual or agency trying to rush you into signing something that you don't fully understand?
  • Does the solution sound too good to be true?
  • Does the individual seem a little too happy to be helping you out?
  • Is the individual or agency standoffish about answering your questions?

A "yes" answer to any of these questions should cause you to second guess using their services. While not all foreclosure services are scams, there are quite a few of them out there preying on the public. Your best bet to avoid becoming a victim is to get all of the services in writing, have all of your questions and concerns answered thoroughly and avoid any companies offering "virtually guaranteed" services.

Avoiding foreclosure scams, especially in today's real estate crisis, is getting harder and harder to do. Use your common sense and look for the warning signs and hopefully, you can avoid this tough time in your life from becoming even tougher.