People often become desperate when they’re in financial trouble, especially if they’re at risk of losing their home.
The old adage, “desperate times call for desperate measures,” rings true during moments of financial stress, and scam artists are ready to pounce. Scammers smell blood in the water when people are entangled in an economic crisis.
If you have fallen on hard times and have been unable to pay your mortgage on time, there are programs available that can help you climb out of debt.
However, it’s often difficult determining which mortgage relief services are legit. To aid you in your search, the Federal Trade Commission (FTC) warns of four mortgage relief frauds that you should be aware of.
Scammers posing as an attorney for a law firm will promise to be your personal advocate in negotiating your mortgage with your current lender in exchange for a fee or monthly installments.
They will instruct you to halt all contact with your lender, lawyer, or credit adviser and send whatever mortgage payments you are able to make directly to them during the negotiations.
Soon after, they’ll stop contacting you and you’ll have no way of getting a hold of them because they have disappeared and taken off with your money.
This scam involves a fake “forensic loan auditor” that will offer to examine your mortgage documents to determine whether or not your lender has complied with the law.
These services don’t come without a “small” fee, of course. The “auditor” will mention that you can use their findings to avoid foreclosure or even cancel your loan.
According to the FTC, there is no evidence that any audit report can be used to modify your mortgage loan.
Scam artists will instruct you to surrender the title to your house in a deal that will allow you to maintain residence there as a renter until you can buy it back at a later time.
They claim that releasing the title of your home will allow someone with a better credit score to receive new financing and prevent the loss of your home. Unfortunately, the amount that you will need to pay to buy back your home will be astronomical.
What’s worse is that you’ll lose the home, the scammer pockets your money, and if the new borrower defaults on the loan, you’re evicted and left homeless.
In a devious plan of action, a con artist will convince you to sign additional documents that will allow you to take out a second mortgage in order to keep your first mortgage current.
Unbeknownst to you, buried in the stack of papers is a separate document that surrenders your home to the scam artist in exchange for the loan.