CBS News ran a story today warning of new and increasing scams targeting struggling homeowners. The scam, in all its variations, is especially despicable as it takes advantage of those who, in desperation and out of fear for losing their homes, are looking for a way to salvage their American dream.
The report cited a 35 percent rise in foreclosure rates through the first quarter of 2010 as providing a rich target environment for scam artists. On average, consumers lose $3,000 if they're victimized by such fraud, but could stand to lose their entire homes. In the state of Nevada alone, which has been especially hard hit in the housing crisis, consumer complaints have been filed against 167 companies reportedly involved in foreclosure "relief" efforts, but which have been fleecing struggling owners instead.
Three Types of scams to watch for:
Phantom Help: The "rescuer" charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily handle on his or her own, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.
Bailout - or "Rent-to-Own": The homeowner is deceived into signing over the deed, in the belief he or she will be able to stay in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back may be impossible, the homeowner loses possession and the "rescuer" walks off with most or all of the equity.
Bait and Switch: In this scam, the homeowner thinks he or she is signing documents to bring the mortgage current, but instead actually surrender ownership. Homeowners usually don't even know they've been scammed until they're evicted.
Signals to watch for:
Beware of the following behaviors that could indicate a business is really a wolf in sheep’s clothing:
- Purports to be a "mortgage consultant"
- Advertises with flyers or solicits door-to-door
- Asks for upfront payment
- Tells you to make payments to them
- Tells You to transfer your deed to them
Report the crime
- Fill out a police report
- Contact your state's attorney general's office
- Notify your lender
For the latest foreclosure news and information, visit www.ushud.com, America's only free foreclosure resource.