How to Recognize Foreclosure Rescue Scams

A foreclosure rescue scam is a popular mortgage fraud scheme involving solicitations that claim to help rescue a home from being foreclosed. High unemployment rates and a bad economy are breeding ground for mortgage abuses because many homeowners are in danger of losing their homes to foreclosure.

What is Foreclosure Rescue?

A foreclosure rescue scam involves a so-called “mortgage company” that says they can help a borrower avoid foreclosure. Their foreclosure rescue team offers to help the homeowner remain in their home if they pay an up-front fee and sign over their property to the company.

Mortgage Fraud at an All-Time High

The number of reported mortgage fraud cases doubled in 2009. Some states, with high foreclosure and unemployment rates,

such as California and Florida, are particularly prone to foreclosure rescue scams. Here are ways to recognize foreclosure rescue scams.

  • Never pay an up-front fee for any foreclosure rescue or advice.
  • Avoid foreclosure rescue solicitations that ask you to not contact your mortgage lender or a housing counselor.
  • Ignore foreclosure rescue guarantees that arrive in the mail, appear on the Internet, or occur over the phone.
  • Do not pay your monthly mortgage payments to a foreclosure rescue company instead of your mortgage lender.
  • Avoid so-called mortgage companies who only accept cash, cashier’s check, or funds via wire transfer.
  • Ignore foreclosure rescue companies who offer to buy your house for cash, or who advise you to sign over your home to them.
  • Never supply personal information to companies who offer to fill out paperwork for you, or to companies who do not seem trustworthy and/or dodge your questions.
  • Never assign ownership to anyone else.

Research & Referrals

One of the best ways to avoid any type of mortgage fraud, is to do your own research. Find a mortgage lender with a good reputation and reliable customer service. You can do this by asking for referrals or recommendations from your family, friends or real estate agent. You can also check important credentials of mortgage companies by going to the Better Business Bureau’s website.

Contact Your Lender

If you’re having difficulty paying your monthly mortgage, or you have already received a notice of foreclosure, contact your lender immediately. Ignoring the situation will only make it worse and make you more desperate for help in the future; the more desperate you are, the more likely you could be swept up by and believe the promises made by a foreclosure scam. By contacting your lender and being forthright about your financial troubles, they will likely work out a repayment plan that can fit your budget. Since foreclosures cost lenders lots of money, resources, and time, they will help homeowners avoid foreclosure in most situations.