Facing Foreclosure? Avoid These Scams

If you are facing foreclosure, make sure you avoid scams and mortgage fraud.  I read some great tips on how to avoid this problem in the Investor Business Daily a few days ago. Here are their recommendations:

Rule #1 – No Money Down

Never pay anyone up front if the offer to represent you to the bank. They may promise that they’ll be able to modify or refinance your mortgage and that’s fine. Just don’t pay them until they get it done. They might just pocket the money and do nothing. Don’t fall for it. (Read about Debt Relief Scams.

Rule #2 – Don’t Pay for What You Can Get For Free

There is a lot of free information you can get from your lender and from nonprofit agencies such as HUD.  If you’re in financial difficulties, the best person to talk to is the lender and the best person to do the talking is you. Be honest and tell them what’s going on. These days, they may be very interested in working with you if you are willing to stay in the property.  There are even strategies you can use to get IRS tax debt relief without using an attorney.  That being the case, you can surely do some leg work with the banks.

Rule #3 – If it sounds to good to be true…..

Nobody can guarantee you anything when it comes to your mortgage and foreclosure. Your situation and your banks’ situations are changing all the time. If somebody makes a blanket guarantee that he or she can solve your mortgage problems, he’s not someone to trust.  Anything you work out with your lender is going to be a customized solution that fits your situation.

Rule #4 Don’t Rely on the Kindness of Strangers

Some slime balls want you to transfer your home to them. They tell you they can get a better loan than you can. The go on to promise that they’ll lease the house back to you and then sell it with the new better loan. What a load of lies. What they’ll probably do is charge you really high rent and then evict you.

Rule #5 Beware the Halloween Effect

Sometimes fraudsters take Halloween too seriously. They fabricate government credentials and try to pass themselves off as government officials. If someone approaches you and claims to be an official, call the agency they claim to work for and confirm their position.

Rule #6 Bankruptcy

There are strategies to declare bankruptcy and save your home equity but they are tricky. Before you hire someone to start this process, understand that if they do it wrong, you’ll lose your home and credit score too. Understand the basics of this before you start going down this road.

What unusual scams have you uncovered?  Are you facing foreclosure?  What is your strategy? How did it impact your credit score?