Avoiding Foreclosure Rescue Scams

Feb 15, 2011 | Tips

If you’re not able to keep up with your mortgage, you may be tempted to enlist the help of a foreclosure rescue agency. Don’t. These types of agencies are often run by con artists looking to take advantage of vulnerable homeowners. Popular scams include:

  • Phantom help: The con artists claim they can negotiate an agreement with your lender, but they require an upfront fee. They may also ask you to start paying your mortgage to them. After they get your money, they usually disappear. There are some foreclosure rescue agencies that may try to contact your lender, but all they're really doing is charging you a fee for something you can do yourself.
  • Rent to own: The con artists claim that by giving them the title to your house, they'll take over your mortgage payments and allow you to stay and pay a reasonable rent. They promise you can buy back the home in a few years. However, the reality is quite different. If there's equity in your home, the scammers may drain it by taking out a home equity loan or refinancing. Other possibilities: they may raise the rent to an unaffordable level and evict you when you can’t pay it or set the purchase price so high that you can't afford to buy the house back.
  • Fake refinancing: The con artists claim that they're refinancing your loan to bring it current and have you sign the “loan papers”. However, often what you're really doing is signing over the title of your home, leaving the con artists free to refinance, take out a home equity loan, or sell the home and keep the profit for themselves. Or they may charge you a hefty upfront fee for their services and give you bogus paperwork.

Legitimate help is available – for free! All SCE FCU members have access to BALANCE, a free financial counseling and education service. A counselor at BALANCE can assess your current financial situation and discuss options for your mortgage and how to approach your lender. To find out more, call us or visit our website.