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Foreclosure Defense Scams in Florida | How to avoid the scam artists.

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Florida Foreclosure Lawyers Expose Foreclosure Scams

Don't Get Scammed by a Foreclosure "Rescue" Company

A large "foreclosure rescue" industry, much of which is a scam, has mushroomed right along with the number of foreclosures. If you are close to losing your home to foreclosure, you may receive an offer of help from a foreclosure rescue company. Companies scour public records and call homeowners who’ve received foreclosure notices. 

The con artists who run these companies will tell you that they have resources that are unavailable to HUD-approved housing counselors and that they care about you and will find a way for you to save your "American dream." But unlike HUD-approved housing counselors, these companies aren’t really trying keep you in your house. They’re trying to make money. If you have equity in your house, they go after it. And if you’ve got only cash, they’ll go after that, instead. 

How to Protect Yourself

Never rely on an oral promise, such as "Don’t worry, you’ll get the deed back in no time." Get everything in writing.

Never sign an agreement unless you understand every word and phrase in it, even if you’ve had help from an HUD-approved housing counseling agency.

Never sign anything that has blank lines or spaces. Representations and information you had no knowledge of can be inserted and appear to be part of the signed agreement.

Never transfer ownership of your property to the "rescuer" or a proposed third-party lender.

Never accept a loan that you can’t afford, or that must be paid back quickly at a high interest rate as a condition of staying in your house.

Scams That Target Home Equity 

If you have significant equity in your home, you are a prime target for the mortgage rescue scams aimed at getting ownership of your house away from you.  

One common trick sounds especially good because the mortgage gets quickly reinstated, at least temporarily.  

What you’ll hear: "We’ll buy your house right now—just temporarily, of course. We’ll make the mortgage payments. You can stay right where you are, lease the house from us, and buy the house back when the loan is paid off."

What really happens: The foreclosure rescue company is confident that you won’t be able to buy the house back, especially if it involves a big balloon payment, which is common. Ultimately, you lose your home and are quickly evicted. Eviction comes quickly because you have only the status of a tenant under the lease or rental agreement that was supposed to be temporary. By contrast, if the house had gone through foreclosure, you would have had been able to stay there for months payment free as the foreclosure process went on. 

Another scam involves wresting ownership away from the homeowner without the homeowner’s knowledge.  

What you’ll hear: "We’ll get a workout with the lender. We’ll handle everything–just send your mortgage payments to us and we’ll pass them on to the lender."  

What really happens: The papers you sign actually transfer ownership to the company. (This can easily be accomplished because people expect legal documents to be full of gibberish they don’t understand, or don’t notice that the documents they sign have blank lines that can be filled in later with terms they never agreed to.) Instead of sending your mortgage payments to the lender, the scammer uses them to refinance the property. Then it sells the house to an innocent third party and disappears, leaving you without equity or a workout.  

If You Don’t Have Much Equity 

If you have little or no equity in your home, you probably won’t be approached by anyone who wants title; what would be the point? But if you are close to a foreclosure sale, there are plenty of other snake-oil peddlers out there.  

For a stiff up-front fee—often in the thousands of dollars—they offer to help you fight your foreclosure by finding affordable loans or by negotiating with your lender for a mortgage modification, an interest rate freeze, or an arrangement in which your missed payments get added to the end of your loan. But not only will you not get results, there’s a good chance that their people will disappear once your money is in hand. 

When the Home Affordable Modification program was announced in March 2009, hundreds of brand-new "modification specialists" hit the street, many "certified" by schools set up to train former mortgage brokers for this new bonanza. These people are taking money for services that can be obtained for free from HUD-approved housing counselors or the Making Home Affordable website at www.makinghomeaffordable.gov.  

EXAMPLE: Frieda and Ted are in foreclosure. They are trying to negotiate a workout with their servicer but are continually told to be patient and that their proposal is moving through the process. Their home is due to be sold in three weeks and they are beginning to panic. They wake up one morning to find a flyer on their doorstep advertising the Compassionate Care Foreclosure Rescue Service, which seems tailor-made for their difficulties. The flyer asks, "Is your home about to be sold at a foreclosure sale? Are you having trouble negotiating with your mortgage servicing company? Want to refinance your mortgage at a low interest rate? We can help!"  

They call the number on the flyer and are referred to a "foreclosure rescue specialist," Nick, who tells them in a soothing voice that Compassionate Care has helped "thousands of people just like you" work out their mortgage difficulties and stay in their homes. After Frieda and Ted give him information about their plight, Nick tells them that he can negotiate with the servicer on their behalf and get an extension of the foreclosure sale date so they’ll have more time to work something out. The fee: $1,500, up front. 

Frieda and Ted borrow the $1,500 from Frieda’s son and send a cashier’s check to Nick at a post office box, along with a signed power of attorney form that Nick says he needs so he can negotiate with the servicer. A few days later Nick tells them that he has gotten the foreclosure sale postponed. Two weeks later, after the date the home was to sold at the foreclosure auction, Frieda and Ted get a call from someone they’ve never heard of telling them that he bought their home at the foreclosure sale and wants to make arrangements for them to move out. Frieda and Ted call Nick in a panic. The number has been disconnected. Frieda and Ted have lost their home—and paid $1,500 for the privilege. 

Remember that if something seems too good to be true, it probably is. Or, as my father taught me: You don’t get something for nothing. I confess that I started to doubt this over the past five or 10 years. A good credit score could produce hundreds of thousands of dollars just for the asking, and it was easy to forget about the debt because of soaring property values and the marvelous tool known as refinancing. Now that the balloon has popped, it’s time to dust off these old truisms. 

provides little or no information about the foreclosure process

claims government affiliation

uses "affinity marketing"—Spanish speakers marketing to Spanish speakers, Christians to Christians, senior citizens to senior citizens, and so on

offers "testimonials" from other customers

claims the process will be quick and easy (dealing with foreclosure is never quick and easy) and uses messages such as "Stop foreclosure with just one phone call" or "I’d like to $ buy $ your house" or "Do you need instant debt relief and CASH?" or

tells you to cease all contact with the mortgage lender.

You owe it to yourself to call an experienced foreclosure attorney to learn about your options and avoid the many foreclosure defense scams facing homeowners today.

Article Courtesy of Nolo.

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