You may have seen the stories in the paper and on television of the rise in foreclosure scams.There are new and different scams born constantly, and with the changing laws and offers of help to homeowners, you are all the more vulnerable if you are facing foreclosure or a change in your ability to continue paying your mortgage. You need to know what to watch for so you can beware.
In my book, Mortgage Walkaway Options (sold at www.MortgageWalkawayOptions.com) my co-author and I discuss some of the scams that have been recognized. But there have been new scams lately that have arisen in response to the new Obama legislation to help struggling homeowners.
The most common scam is a promise by someone or by a company to help with a loan modification. Many times these companies ask for fees up front and tell you that they can get your loan modified. In severe cases they ask you to make monthly payments to them instead of to your mortgage holder. This is illegal. Note that it is ILLEGAL in California for licensed brokers to ask for money upfront in exchange for obtaining a loan modification UNLESS you are hiring a law firm to do so. The one exception is if the company asking for the fee has met the qualifications required by the state Department of Real Estate (DRE). You can go the the DRE website and see a list of companies that have met these qualifications. http://www.dre.ca.gov. Look under the ‚ÄúConsumers‚Äù tab.
Another scam involves companies (like those mentioned above) telling you that they will get you a loan modification if you quit claim your home over to them. They explain that if they have title to your home it is much easier for them to work with the lenders. This is simply not true. The lenders need to work with the homeowner who has a history with the mortgage. The problem is that a quitclaim does not transfer your mortgage with your property, so you will still be liable for the mortgage but will not have the property as collateral to get a work out plan.
Recently the Federal Trade Commission warned consumers about a new scam related to the new economic stimulus package. It involves a promise to help people qualify for a payment from the stimulus package in exchange for a small fee. Mostly this is done on the web and by use of email. The scammers tell you all you have to do is provide them with your bank account number so that they can deposit the money directly into your account. They then drain your accounts and disappear. Many times the information obtained is used for identity theft.
A variation of the above scam involves the scammers asking for a very small fee in order to obtain a list of economic stimulus grants that they can apply for. Sometimes this fee can be as little as $1.99. The credit card is then used for identity theft or to charge even larger sums of money. OR the small fee can be used as a down payment on a ‚Äúnegative option‚Äù agreement, which can charge hundreds or thousands of dollars unless the consumer cancels the account (which they usually don’t know about).
Finally, there are websites that look legitimate and provide consumer links to information that promises to help with loan modifications or stimulus grants. Many of these sites look extremely legitimate, but when consumers click on the links they are downloading a virus that allows access to their computers. Scam artists then have access to personal information and use it to commit identity theft. Surprised that people would fall for all this? They do, and the numbers are rising. Fear and helplessness cause people to do desperate things.
Here are a few basics to remember:
1. NEVER quitclaim your home to anyone without consulting an attorney
2. DO NOT pay a fee to anyone to help you with your loan modification (unless it is your attorney). You can do most of the work yourself, and in my opinion with a much better chance at resolution‚but you need to educate yourself first. For help you can download my book at www.MortgageWalkawayOptions.com.
3. Do not pay money with your credit card on websites that promise to help or open links on such sites that say they can help you. All the help you need is available on the web at sites run by legitimate helpers like HUD (www.HUD.gov) or HopeNow (www.HopeNow.com, 888-995-HOPE). I also personally have links to some White House sites that provide a great deal of information about the current programs, so feel free to contact me if you would like that information.
4. GET EDUCATED‚know your options and how you can help yourself before you let anyone else help you (besides your lender, of course).
There are a lot of legitimate resources out there to help you. Best of luck to you!