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Fraud Tip of the Day - August 2
Foreclosure Rescue Scams
Thousands of people with adjustable rate mortgages are about to be hit with a big jump in their interest rate. The jump may make it impossible for homeowners to keep up with the mortgage payments, which would open the floodgates for fraud.
State regulators are sounding the alarm bout foreclosure rescue operators who claim they're trying to help you only to end up taking your house. These are people who specifically target homeowners facing foreclosure.
The foreclosure plague is silently swallowing family homes, in many cases unnecessarily, because homeowners wait too long to get help.
Waiting until the last minute to get help makes you a sitting duck for opportunists who know you're desperate.
"And they will be contacted by these people who are going to try to take advantage of them," said Deborah Bortner with the Department of Financial Institutions.
Their promise will sound like a way to keep your home. The classic foreclosure rescue scheme involves an offer that involves you transferring your title or selling your home to a so-called "investor", then leasing back your home with the option to buy it back at a later date.
"(They'll say something like) 'for a fee, I'll take care of your home for several years, then you can get back on your feet and repurchase the home,'" Bortner said.
But the odds are stacked against you. The monthly payments are typically higher than the mortgage payments you couldn't afford.
State regulators say people rarely, if ever, get their homes back.
Investigators warn homeowners to seek help from known legitimate sources if they're having trouble keeping up with mortgage payments. Walk away from anyone who suggests they can help you by having you temporarily sign your house over to someone else.
Brad Benfield Department of Licensing: "Don't sign anything that you believe might transfer the ownership of your house because at that point, you have no leverage left," said Brad Benfield with the Department of Licensing.
People who get lured into foreclosure rescue plans not only lose their homes, they often lose all the equity in their homes and many are evicted.
If you're having trouble making mortgage payments, note the following:
- contact your lender immediately and try to negotiate a payment plan.
- Contact a reputable non-profit debt counselor.
- Consider selling your home so you can pay off the loan before foreclosure and maybe have some cash to start over.
- And avoid all unsolicited offers from people who claim they can help you save your home.
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