Beware of the Foreclosure Scams

Posted on July 30th, 2008 by saman

There are not many people who are unaware that the current problematic housing market and out of control foreclosures. A foreclosure is difficult and many homeowners struggle to find a solution. Unfortunately many homeowners find the wrong solutions.

Many homeowners believe that is was a good idea to take a second mortgage on their house. However, they were only putting their home in greater risk if the economy or housing market failed and unfortunately this is just what happened. The current year has seen rapidly increasing costs of gas and food. Because the current economic situation appears bleak, a home owner needs to be even more aware of things that could further hurt them in the future, especially if they are dealing with a foreclosure.

Most likely you have seen signs and ads that advertise companies that will “save you from foreclosure” or “buy your home for cash.” Many times, the companies that advertise this way are only predators. There are some who have compared the methods of these “rescue” companies to handing a homeowner a life jacket filled with cement.

When it comes to their foreclosed homes, people may become lax in judgment since this is such an emotional issue. If a homeowner is not careful, someone could buy their home for much less than it is worth or even worse, the home will be rented out while you are still making payments on the home.

There are three kinds of foreclosure scams and it is very important to know about each one.

First, a scammer will charge the homeowner huge fees to do such menial things as make phone calls and get forms. You could easily do these things yourself. This type of thing may give the owner of the home false hope. Ultimately, this person will have done nothing of substance for them and their situation is not helped. The owner of the home is still as close to foreclosure as they were previously and now, by falling for this scam, they are also hundreds of dollars more in debt.

While this scam is bad and causes the homeowner to lose a few hundred dollars, this is better than losing thousands of dollars in home equity due to the scams that follow.

Scam artists will use a “bait and switch” is some instances. The way this works is that the homeowner sign forms that state that they are going to keep the mortgage payments current. They believe they are signing this form for the bank. However what they are actually doing is signing the home over to some third party. The most unfortunate thing about this is that even though the homeowner has signed the home over, they still have the pay the mortgage. The scam artist will even evict the homeowners once the paperwork is recorded with the courts