Recession-related job loss, cut backs, and bank crackdowns have left many debt-mired homeowners wondering what they can possibly do to save their homes from foreclosure. Unfortunately, for every downtrodden soul, there is a scumbag con artist waiting to take advantage.
These crooks disguise themselves as well-meaning, competent professionals who are capable of helping honest people avoid foreclosure. But, behind the masks, their eyes are targeted at your checkbook, or the title of your home, in some creative mortgage reconstruction scams.
Keep an eye out for these warning signs and make sure you don’t become their next victim.
Types of Mortgage Housing Scams
1.Fake Government Employees
The phone rings and it’s someone from a government agency or company you’ve never heard of, offering to enroll you in a program that will save your home. Seem to good to be true? It probably is. If you ever find yourself on the receiving end of one of these calls, remember:
- You shouldn’t have to pay. As with many scams, one of the first tell tale signs is a request for payment. Real government programs, such as Making Home Affordable, are generally free. If you are ever informed that you will have to pay for government assistance, it’s most likely not the real deal.
- Always ask for identifying information. No matter how trustworthy a person may seem, always question who you are speaking with. If someone claims they are working with the government or an affiliated agency, get as much information from them as you can. This should include: their full name, phone number, government email address (I don’t think the federal government uses Hotmail), office location, and the names and contact information of any supervisors.
- Offer to come by their office. Tell the person that you would prefer to discuss everything in person. If they go as far as giving a physical address, take note and look into it later.
- Wait for a website. Keep in mind that any real government official will, more often than not, offer you a link to a government website for more information about whatever they’re offering.
When pressed for information, most of these con artists will give up. They are looking for easy, gullible targets, and won’t want to waste their time on someone with their guard up.
2. Mortgage Reconstruction Counselors
This is another popular scam. Crooks will offer their services to help you negotiate rates with your lenders. Of course, they will not do this for free. They will demand a sizable, upfront fee before delving further into their bag of tricks for ways to take your money.
One of the most common tactics used in this scheme is duping borrowers into allowing the scammer to take over their mortgage payments. After you’ve paid their fee for a month or two, they will usually disappear. By the time you receive your first notice for delinquent payment, the scam artist, and your money, are probably gone forever.
Don’t allow yourself to be intimidated. Rather than talking to strangers, work directly with your lenders (e.g. Quicken Loans) and find out what services are available to you. Most financial institutions will be more than happy to assist you in any way they can.
3. People Trying to Obtain Your Title
Some scam artists don’t want to steal your money. Their target is fixed on your home itself. These are perhaps the most terrifying scams of all, because there may be no legal recourse. Many of the strategies, while completely unethical, are not considered criminal.
Here are a couple common schemes they may implement:
- Rescue Loan Scams. A scam artist will take your house in exchange for a rescue loan, which is just a classic example of the bait-and-switch scam. They tell you that a loan is available to help you save your property. Read the fine print, however, and you will realize that you are actually surrendering your property in exchange for this loan. In court, the crooks can easily claim they did you a service by saving you from foreclosure. If it’s all right there in a craftily worded document you signed, you’ll be out of luck trying to plead your case.
- Rent to Buy. The crooks will tell you that if you sell them your property, they will give you a chance to buy it back later. You just have to rent it for a while. While the sale will be put in writing, the rental promise will not be written, nor will it be honored. “But he promised..” simply won’t hold up in court.
There are a number of unscrupulous people out there who will do whatever they can to take advantage of innocent, hard-working Americans trying to save their homes. Scam artists are often difficult to recognize, because they are such convincing liars. Protect yourself by asking the right questions and dealing with the right people.
If you need help, check with your lender to see if you are eligible for any type of assistance. Make sure you know who you are working with and never, ever sign a document without taking it to an attorney or other qualified professional. This goes for similar home improvement and repair scams as well.
Have you or someone you know fallen victim to a mortgage reconstruction scam? Help others by sharing your story in the comments.