Foreclosure Help: Hotlines and Scams

Posted on November 12th, 2008 by saman

With a record number of homes going into foreclosure in alarming numbers, the list of businesses rushing to “help” thousands of troubled homeowners is rising just as quickly. Some are legitimate resources such as financial counselors and local information hotlines offering to help save local resident’s homes. Yet lots of others are simply scammers reaching out to homeowners by internet, phone, and mail. It’s not wonder that families facing foreclosure could easily find themselves confused about where to safely turn for help.

In North Carolina, it has been publicized that homeowners in foreclosure are being approached by companies offering to bargain with the lender on their behalf. They require an upfront fee, which has ranged from $1,400 to $1,800 and is required up front with a signed waiver. Troubled homeowners who take these scam artists up on the offer may walk into a court hearing believing everything has been taken care of for them, when actually nothing has been done.

These scam artists are operating nationwide and even through the internet. Most people have received multiple solicitations through their inboxes, whether in foreclosure or not.

Of course, helping families in financial trouble is not against the law, but in North Carolina it is illegal for a foreclosure case intermediary to charge a fee up front. These business and/or people are feeding on the ill fortunes of others as the rise in home foreclosures spikes.

Every day more and more Americans grow desperate to save their homes from becoming foreclosed homes, and many would latch onto anyone claiming to save them from losing it all. In Ohio a hotline has been set up to give information to local people feeling this desperation. The “keep your home” program allows families in trouble to simply dial 2-1-1 and be given advice that could potentially save their homes from foreclosure. The program is offered through the United Way and is not a new resource, though many homeowners do not yet know about it. They say 65% of their callers are able to escape foreclosure on their homes using their information.

Homeowners looking for information on how to save their homes or seeking representation to deal with a lender on their behalf should not believe the claims of any company demanding an up front fee. There are financial counselors trained at helping in these cases and if they charge a fee to start it should be extremely minor.

More important, homeowners in trouble with their mortgage can contact their lenders on their own. Many lenders will make a pay scale or other arrangement with homeowners who have not previously been in foreclosure. They do not need anyone else to act as intermediary for this to be set up. If a homeowner does want an intermediary, a financial counselor is the best place to turn.

Many communities should be starting hotlines similar to the 2-1-1 program talked about here, and there are always local agencies available to help struggling homeowners with some of their questions.