Foreclosure help scams get simpler all the time

Latest “foreclosure help” scheme just takes the money and runs

The real estate market in the United States has been red hot for the past five years. Due to recent increases in interest rates and a slowing economy, sales have slowed down and prices have begun to drop. In fact, the median price of a home in the United States has actually dropped in the last twelve months, a trend that is expected to continue. With rising rates, many consumers who purchased homes with adjustable rate loans are seeing their rates rise, and some of them cannot afford to pay more than they are currently paying. If you cannot afford to pay for your home, your lender is likely to foreclose.

With the rising rate of foreclosure, more and more criminals are taking advantage of distressed homeowners. A growing financial scam is the notion of “foreclosure help”, where a company offers to assist, for a price, a homeowner who faces foreclosure. The usual scheme has the homeowner sign over the deed to the home to the company. The company agrees to pay back mortgage payments and to lease the house back to the homeowner for a year or two. At that time, the company will sell the house back to the homeowner for a fee that allows the company to make a profit. It never works that way, of course. Instead, what happens is that the company evicts the owner from the home as soon as the title is signed over. The house is then sold and the company takes their profit from the sale.

That is a rather complicated scheme, and is apparently too complicated for some criminals who would rather take their profits more quickly. In a recent bust of a foreclosure help ring in North Carolina, a new, and much simpler, scam was discovered. This one is so simple a child could do it:

The crooks scour county records to find homeowners who are facing a foreclosure risk. They then contact the homeowners, either by mail or by phone. Those who respond are told that the company can help them avoid foreclosure for a fee. That fee generally amounts to about one month’s mortgage payment. The company then collects the payment and does nothing else.

That’s it. They are simply stealing one month’s worth of mortgage payments from homeowners and are stealing their money $1000-2000 at a time. Granted, it is a rather small time scheme when compared to the more complicated ones that involve selling homes that may be worth hundreds of thousands of dollars, but if you work in an neighborhood where a number of people are facing foreclosure, the scheme could still be rather lucrative.

What makes matters worse for the victims of this scam is that the company told them not to contact their lender directly. The company, upon receiving payment, assured the owners that they would contact the mortgage company and take care of any delinquencies. Not only did the company steal money, but they didn’t contact lenders. This puts homeowners who are already at risk of losing their homes in a much worse situation.

This may come as no surprise, but there is not such thing as honest foreclosure help. If you cannot pay your mortgage, your best bet is to call your lender directly and discuss possible options with them. They may be more helpful than you realize.