Now that we’ve warned you a bit about mortgage foreclosure scams in general, let’s talk about some specific scams to be on the lookout for.
First, understand that there are two general kinds of scams out there that purport to help you avoid or stop a foreclosure.
One kind of scam is designed to get title to your property so that the scammer can strip out whatever value is there. The second kind of scam just tries to get you to pay money for one reason or another, for one frivolous “service” or another.
In this blog we’ll look at the scammer that tries to get title to your property. Since once a scammer gets the title to your property they can do with it as they please, this is an incredibly dangerous scam. Not only are you deprived of your property, but you lose the ability to pursue legitimate avenues to address the foreclosure. And never forget the difference between a note and a mortgage. If you no longer own the property a mortgage foreclosure may not be all that much of a concern, but regardless of how the foreclosure turns out, you remain personally liable on the note.
So how do these scams work? As with crooks across the board, if you can conjure up a scenario, it probably has been used or at least tried.
Typically a homeowner with an actual or impending foreclosure is approached by someone offering to help them with their problem. They point out that because a foreclosure has been commenced (or the mortgage payments are way very far behind) that the homeowner’s credit is not good enough to allow him to refinance and pay off the loan being foreclosed. The solution? Deed the property to an “investor” with sterling credit. For what appears to be a very reasonable fee, they will then refinance the houses and then “sell” it back to the homeowner. While this is happening the homeowner is allowed to remain in the house as a “renter”.
Will that ever happen? OF COURSE NOT!
As soon as the “investor” has title to the property they will use it to their advantage. If there is substantial equity in the property they will refinance it, or take out a second mortgage, pocketing the money. If that is not possible, they will rent the property (after evicting the homeowner). They may sell the property to someone else on a land contract, charging a very low down payment followed by monthly payments made to the scammer.
The common threads of course are that the homeowner has lost their property, the legitimate lender is not being paid and any value in the property, whether in the form of financeable equity or monthly income goes to the scammer.
Since the mortgage crisis of 2007-2008 there have been numerous government programs instituted to help homeowners in trouble with mortgages. These usually involve some form of re-negotiation of the mortgage, or arrangement to pay arrearages over time.
The single most important thing to know is that none of these remedies or programs… that’s right NONE – not a single one, require you to transfer the title of your home.
So the moment someone approaches you and even hints that the “way out” is to deed the property to someone else, that should be a giant red flag and you should show them the door.
As a reminder. If you are facing foreclosure, and if you are approached by anyone suggesting that you transfer title to your home, Be Your Own Lawyer, as a service to you, will review your situation, and advise you concerning any “help” offer you may have received, at no cost.