Foreclosure Scams

Posted on June 11th, 2008 by saman

There are many sharks out there that will take advantage of individuals who are having a hard time in order to steal their money. Foreclosure scams are no exception.

Individuals who are facing foreclosure are under a lot of distress emotionally. This stress will cause someone’s judgment to become cloudy. This is when scammers strike.

Unfortunately, no matter how bad the situation of a person is, there is always someone waiting in the shadows to exploit their stress and pain for selfish gain.

Those who invest in foreclosures purchase a property prior to it going to auction. This way the owner is saved from having a foreclosure on their credit report. A foreclosure investor may also buy a property at auction. The idea of foreclosure investing is to buy a home under market value and resell it for profit.

A foreclosure investor is not a scam artist. Investing in foreclosures and pre foreclosures is legal and a good way to make money in real estate. Even so there are some predatory “investors” and con artists who prey on distressed families. This is the beginning of a scam. There are different types of investment scams to be aware of.

First, never give money to someone so they can stop the foreclosure process. There are some ads you may see that say they can assist you in stopping foreclosure by negotiating with you bank or lender. This may sound like a good deal but do not pay them up front. It is wiser to find some state or local services or even HUD. These organizations can offer you counseling and programs to protect you from foreclosure.

Another foreclosure scam to be aware of is deed theft. Deed theft is the most common foreclosure and mortgage fraud scheme. Distressed homeowners are tricked by the con artist to signing over their homes. In exchange for signing over the property the con artist will say that if the home owner makes reduced payments regularly they will retain their home. However, the con artist will let the house fall into foreclosure or they will sell the home.

Foreclosure investment clubs are another scam to be aware of. This scam involves those who want to get in on the profits that can be gained from foreclosures. What happens is the con artist will trick the potential investor into becoming part of a foreclosure investment club. This investment club puts their money together in order to buy homes in foreclosure or pre-foreclosure. However, the homes may not ever be bought and if they are bought, they are sold to imaginary buyers. Therefore there is very little return on the individual’s investment. When the home is sold to an imaginary buyer, the con artist will get the property for practically nothing.

For anyone who believes they may have been a victim of a foreclosure scam, the local police should be contacted, along with their bank or lender. A housing counselor in the local area should be contacted for assistance and advice.