The TODAY Show aired another set of warnings about mortgage scams on May 27, 2009. The expert reports there are currently millions of Americans on the brink of foreclosure and some illegitimate “Foreclosure Consultants” are taking advantage of their dire situations.
- WHN Tip: Contact your lender directly before you get behind in your mortgage payments. Ask for options to renegotiate the terms of your loan.
Real estate expert Barbara Corcoran outlined the newest scam along with several that have been wreaking havoc with desperate homeowners for months.
The latest scam involves President Obama’s Rescue Plan designed to help seven to nine million families avoid foreclosure. People are paying thousands of dollars to illegitimate counselors who promise to research facts about qualification and the application process. Of course, they don’t conduct the research and, instead, keep the money.
The information you need is free and can be accessed in two simple ways. First, the Internet site makinghomeaffordable.gov provides everything you need to know. Second, a call to 888-995-HOPE delivers the same assistance.
Make sure you are visiting a legitimate website. The scam artists often create websites with official-sounding addresses that may end with “.gov”. Don’t assume a site with this type of name is legitimate. If you have any questions about the legitimacy of a site, conduct a Google search with the name and the word “scam” or just search “mortgage scams”. Go to the Better Business Bureau and the Federal Trade Commission sites as well.
One of the most dangerous scams is called “Bait and Switch”. An illegitimate counselor hands the prospect a document to sign. Instead of a mortgage application, the document is actually a transfer of title. Once signed, the scam artist owns your home and you are evicted.
A “Rent-to-Buy” scheme is equally dangerous. The representative offers to buy your home at a very low price and promises to sell it back when you get on your feet. In the meantime, they propose you pay rent. Soon, the rent soars well beyond your means, they own the home and you are evicted.
The “Middleman” scam preys upon your vulnerability and lack of self-confidence. Besides requiring you to pay thousands upfront, you are required to supply confidential information such as your social security numbers, bank account numbers and/or driver’s license details. (WHN NOTE: Never release your confidential information until you are certain the company is legitimate and it will not be used for identity theft.) The illegitimate counselor then tells you to “leave it to me” and collects your mortgage payments with a promise to pay the bank while they renegotiate your loan for you. Of course, they take your money and your confidential information and disappear. They had no intention of ever speaking with your bank.
In the “Bankruptcy” scheme, the scammer promises to work with the lender on your behalf. Instead, they file bankruptcy on your behalf and you lose both your home and your credit rating.
According to Barbara Corcoran, there are legitimate mortgage consultants in the country. WHN recommends that you start by working directly with your lender or the government. Again, the information is free and readily available. You can make a few calls or visit the legitimate websites to get the ball rolling without spending a dime.
There are websites to help identify scams and provide advice about how to safely deal with a mortgage renegotiation or refinance. One to visit is scambusters.
If you have questions or would like to share your experiences, please email me: Leann (at) WhatHappensNow.com.