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Consumer Tips: Foreclosure Scams

Struggling homeowners should call 888-995-HOPE (4673) and go to MakingHomeAffordable.gov to learn more.

Don’t Get Scammed!

The possibility of losing your home to foreclosure can be terrifying!

Con artists can and will prey upon your fear of losing your home in tough economic times. You may be close to panic and desperate for a solution. Con artists know this and can target those most vulnerable for an easy score.

That’s why Pinellas County Consumer Protection wants to make sure you know how to avoid the scams when seeking foreclosure relief, and who to contact for genuine help if you are facing the prospect of losing your home to foreclosure.

Con artist are constantly on the prowl.

Bogus foreclosure rescue firms use a variety of tactics to find homeowners in distress. Some look through public records or solicit clients through ads on the Internet, on television, or in the newspapers. Others call you on the telephone offering to save your home from foreclosure. All these solicitations have one thing in common. They tell you exactly what you want to hear, no matter how exaggerated or blatantly untrue.

The Promises…

  • Stop Foreclosure Now
  • We guarantee to stop your foreclosure
  • We can save your home
  • We stop foreclosures everyday
  • We have a special relationship with your lender

Unfortunately, these big promises deliver very few results.

The Scams…

The Phony Counseling/Phantom Help Scam

The con artist tells you he can negotiate a deal with your lender to save your home, but you must first pay an upfront fee. You may be told not to contact your mortgage holder yourself. The counseling agency will handle all the details. Once you write the counseling agency a check, the scam artist takes off with your money.

The Bait and Switch Scam

A scam artist will ask you to make your mortgage payments directly to him, while he’s supposedly negotiating new terms with your lender. After a few months of not hearing anything, you find the scam artist is nowhere to be found. Not only have you paid good money for zero results, but now you’re even further behind on your mortgage payments.

Frequently, a scam artist will ask you to sign documents to make your delinquent mortgage “current”. This is a trick. What you’re doing is signing documents that surrender the title of your house to the scam artist for a nonexistent “rescue” loan.

Rent-to Own Scam

The scam rescuer convinces you to surrender the title to your home, so you can stay in your house as a renter. Over the next few months, the con artist promises that your timely rental payments will help restore your credit, and allow you to qualify for new financing that will enable you to buy your home back. But often, the terms of the new deal are so convoluted that buying back your home is an impossibility. Should the scam rescuer default on the home’s mortgage, you may be evicted from your “rental” property, and still be liable for the balance of the original loan.

In a similar scam, the rescuer raises your rent payments over time, until you’re forced to leave your home because you can no longer afford to live there. Then, the scam artist is free to sell your home and make a profit.

In a third variation of this scam, the con artist offers to find a buyer for your home if you sign over the deed and move out. The scam artist is not looking for a buyer. He or she simply rents your home and pockets the payments. The foreclosure continues and your credit is destroyed.

Bankruptcy Relief scam

The scam artist promises to negotiate with your lender to get refinancing, if you pay an upfront fee. Instead of contacting your lender, the scam artist files a bankruptcy claim in your name. A bankruptcy claim often stops a home foreclosure, but only temporarily. And if you fail to abide by the very strict conditions of a bankruptcy proceeding, the bankruptcy motion can be dismissed and the foreclosure continues. You could still lose your home, the money you paid to the scam artist and face up to 10 years of bad credit because of the bankruptcy.

Many of these foreclosure scams involve signing over the deed to your home to the foreclosure relief scam artist. But remember, signing over the deed to your home does not relieve your obligation to satisfy the original mortgage.

The Red Flags…

If you’re looking for legitimate foreclosure relief, avoid any agency where you find these red flags:

  • Guarantees to stop your foreclosure no matter what your circumstances.
  • Tells you not to contact your lender, attorney or credit counselor.
  • Asks for an upfront fee.
  • Asks for payment via cashier’s check or wire transfer.
  • Suggests you enter into a lease agreement so you can stay in your home.
  • Tells you to forward your mortgage payments (or partial payments) directly to the agency.
  • Requests that you transfer the deed to your home to the agency.
  • Offers to buy your house at a price unrelated to market prices.
  • Offers to fill out the paperwork for you.
  • Pressures you to fill out paperwork without reading the fine print, or consulting with an attorney.

What Should You Do?

If you’re having trouble paying your mortgage, or you have received a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule by dealing directly with your lender. Don’t give in to the empty promises of a foreclosure fraud con artist.

If you suspect that you might be the victim of foreclosure fraud, or if you have been approached by an agency that claims to be able to save your home from foreclosure, contact:

Helpful Resources for Residents