1) If you believe that you are the victim of criminal activity, such as
forged documents being presented for your signature, you should
contact your local law enforcement agency.
Protect Yourself
Know with whom you are dealing. Before
you hand over any money or provide any
personal information, check out the company
or person. You can check your local Better
Business Bureau or state consumer protection
office to see if the company or organization is
legitimate and if any complaints have been
filed.
Contact reputable non-profit housing or financial counselors, such as those you can find by contacting the:
• U.S. Department of Housing and Urban Development
(HUD) at (800) 569-4287 or
www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
• Homeownership Preservation Foundation at
(888) 995-HOPE or www.995hope.org.
Know what you are signing. Read and understand every document you sign. If a document is too complex, seek advice from a
lawyer or trusted financial counselor. Never sign documents with
blank spaces that can be filled in later. Never sign a document that
contains errors or false statements, even if someone promises to
correct them later.
Get promises in writing. Oral promises and agreements relating
to your home are usually not legally binding. Protect your rights
with a written document or contract signed by the person making
the promise. Keep copies of all documents you sign.
General Resources
FDIC Foreclosure Prevention Website
www.fdic.gov/foreclosureprevention
(877) ASKFDIC or (877) 275-3342
Government-sponsored Mortgage Modification and Refinance Programs
• Making Home Affordable
www.makinghomeaffordable.gov/
• HOPE for Homeowners (H4H)
http://portal.hud.gov/
(800) CALL-FHA or (800) 225-5342
Foreclosure Mitigation Assistance and Counseling
• U.S. Department of Housing and Urban Development
www. hud.gov/offices/hsg/sfh/hcc/fc/ or www.hud.gov
(800) 569-4287
• Homeownership Preservation Foundation
www.995hope.org
(888) 995-HOPE
• NeighborWorks America
www.findaforeclosurecounselor.org/ or www.nw.org/network/home.asp
Report Foreclosure Scams
• Federal Trade Commission
www.ftccomplaintassistant.gov/ or
www.ftc.gov/bcp/menus/consumer/credit/mortgage.shtm
(877) FTC-HELP or (877) 382-4357
• State Attorney General Contact List
www.naag.org/attorneys_general.php
• State, County and City Consumer Protection Offices
www.consumeraction.gov/state.shtml
Make your mortgage payments directly to your lender or the
mortgage servicer. Do not trust anyone else to make mortgage
payments for you.
Never sign over your deed until you clearly understand what
will happen to your rights to your home. Foreclosure scams
often require you to “temporarily” sign over ownership of your
home to another claiming it would be only as a means to help you.
Consult with a HUD-approved homeowner counseling agency.
Federal Deposit Insurance Corporation
www.fdic.gov/foreclosureprevention
06/09
Report suspicious activity to the Federal Trade Commission,
your State Attorney General’s Office or your state and local consumer protection agencies. Reporting con artists and suspicious
schemes helps prevent others from becoming victims.
FDIC-026-2009 (revised)
Beware of Foreclosure
Rescue and Loan
Modification Scams
If It’s Too Good to be True,It Probably Is
To protect yourself from opportunity hunters and frauds:
• Contact your lender or mortgage loan servicer and try to
negotiate a payment plan.
• Work with reputable non-profit housing or financial
counselors.
• Report suspicious activity.
Read more inside or go to the resources section on the back panel
for whom to contact for immediate help.
2) Tips for Avoiding Mortgage Foreclosure
Rescue and Loan Modification Scams
Beware of Unethical Mortgage Foreclosure
Rescue and Loan Modification Operators
A fairly new and dangerous threat has arisen for homeowners
who have fallen behind on their mortgage payments and may be
at risk of foreclosure – opportunistic companies. They often refer to
themselves as a “foreclosure consultant” or “mortgage consultant,”
and market themselves as a “foreclosure service”, “foreclosure rescue agency” or “loan modification company.” They count on homeowners being vulnerable and desperate.
These companies claim they can assist homeowners facing
foreclosure with options that allow them to keep their property,
refinance or modify an existing mortgage, repair credit or help “buy
more time.” In reality, these “options” are intended to convince you
to take the wrong steps so they can take your money and possibly
your home.
Remember the old saying, “If it’s too good to be true, it probably
is.”
Be safe. It is important that you take action by contacting your
mortgage lender – or any legitimate financial counselor – to find
real options to avoid foreclosure. A number of agencies provide
free counseling services to homeowners who are having trouble
making ends meet (see the “Protect Yourself and Resources Sections”).
These agencies can help you explore your options, which may
range from modifying your loan to refinancing your loan to selling
your home and using any equity to start over.
Watch Out for the Common
Foreclosure Rescue and Loan
Modification Scams
Lease-Back or Repurchase Scams – In this scenario,
a promise is made to pay off your delinquent mortgage, repair your credit and possibly pay off credit cards and other
debt. However, in order to do this, you must “temporarily” sign your
deed over to a “third party” investor. You are allowed to stay in the
home as a renter with the option to purchase the home back after
a certain amount of time has passed or your financial situation
improves. The trouble is once you have signed away your rights
in your property, you may not be able to repurchase the property
later, even if you can and want to. After the new owner takes ownership of your property, the new owner can evict you. Furthermore,
the scammer is under no obligation to sell the house back to you.
Typically, after the deed is signed away, the property changes
hands numerous times. The scammer may have taken a new mortgage out on your home for hundreds of thousands of dollars more
than your mortgage, making it impossible for you to buy back your
home.
Partial Interest Bankruptcy Scams – The scam operator asks
you to give a partial interest in your home to one or more persons.
You then make mortgage payments to the scam operator in lieu of
paying the delinquent mortgage. However, the scam operator does
not pay the existing mortgage or seek new financing. Each holder
of a partial interest then files bankruptcy, one after another, without your knowledge. The bankruptcy court will issue a “stay” order
each time to stop foreclosure temporarily. However, the stay does
not excuse you from making payments or from repaying the full
amount of your loan. This complicates and delays foreclosure, while
allowing the scam operator to maintain a stream of income by
collecting payments from you, the victim. Bankruptcy laws provide
important protections to consumers. This scam can only temporarily delay foreclosure, and may keep you from using bankruptcy laws
legitimately to address your financial problems.
Refinance Scams – While there are legitimate refinancing programs available, look out for people posing as mortgage brokers
or lenders offering to refinance your loan so you can afford the
payments. The scammer presents you with “foreclosure rescue”
loan documents to sign. You are told that the documents are for a
refinance loan that will bring the mortgage current. What you don’t
realize is that you are surrendering ownership of your home. The
“loan” documents are actually deed transfer documents, and the
scammer counts on your not actually reading the paperwork. Once
the deed transfer is executed, you believe your home has been rescued from foreclosure for months or even years until you receive an
eviction notice and discover you no longer own your home. At that
point, it is often too late to do anything about the deed transfer.
Internet and Phone Scams - Some scam lenders convince you
to apply for a low-interest mortgage loan on the phone or Internet.
They then extract vital information, such as your social security
and bank account numbers. In this scam, the loan is immediately
accepted, after which you start faxing the documents and send-
Warning Signs That You May Be Dealing
With A Mortgage Foreclosure Scam Operator
If The Company:
Demands a fee in advance. No legitimate organization that works
with borrowers to avoid foreclosure will ever ask for money
up front.
YZ
Offers to negotiate a loan modification for you for a fee.
YZ
Makes unsolicited offers or “lofty” advertisements,
claiming they can help save your home.
YZ
Recommends you break off contact with the lender and any
counselor that you may have been working with.
YZ
Advises you to stop making mortgage payments.
YZ
Tells you to send your mortgage payment to anyone other than
your loan servicer.
YZ
Instructs you to transfer ownership of your property.
YZ
Makes verbal promises that aren’t put in writing.
YZ
Asks you to sign a document that has blank lines or spaces.
ing wire transfer payments to the phony company without even
meeting the lender. Unfortunately, this scam will put you in twice
as much trouble--your personal details have been stolen or sold,
putting you at risk of identity theft, and your home is still at risk of
foreclosure.
Phantom Help Scams - The scam operator presents himself as
someone who is able to help a homeowner out of foreclosure or
qualify for a government loan modification or refinance program.
In exchange for his or her “services,” outrageous fees are charged
and grand promises are made for robust representation, which
never occurs. The “services” performed entail light paperwork or
occasional phone calls that you could easily have made yourself. In
the end, you are worse off than before, because you have little or
no time to save your home, or seek other assistance.
Caught in a Foreclosure or Loan Modification
Scam?
If you get caught in one of these scams, it is imperative that you
contact a lawyer right away. An attorney can assist you as you
navigate your way through the process. Lower income individuals
may be able to find free legal services; see
http://www.findlegalhelp.org.