WASHINGTON (3/9/09)--With one of five mortgages underwater--where mortgage debt is greater than what the home is worth--more families are struggling to avoid foreclosures. But foreclosure isn’t the only reason people are losing their homes: Reports of foreclosure rescue scams are on the rise. Victims are targeted via the Internet, phone, direct mail and door-to-door solicitation (Board of Governors of the Federal Reserve System, March 5). Scam artists use public information--foreclosure filings--to zero in on unsuspecting victims. In one reported case, a desperate homeowner signed a contract with Foreclosure Solutions for $695, and then paid another $1,400, which supposedly was being forwarded to the lender (CBS News.com
Feb. 19). Instead of forwarding the mortgage payment to the lender, Foreclosure Solutions allegedly pocketed the money. The victim discovered the scam a few days before her home was to be auctioned off. The Federal Reserve offers tips to spot a phony pitch:
* Be suspicious of “guarantees.” If someone promises to take care of everything and insists, “Don’t worry, we do this all the time,” don’t just back away--run in the other direction. * Don’t rely on someone else to contact your lender or servicer. If someone approaches you and offers to negotiate with your lender on your behalf, or offers to send your payments to your lender, just say no. Don’t hand over a mortgage payment to a stranger, no matter how convincing the person sounds. * Take time to read what you sign. If someone is in a hurry to get your signature, the person probably doesn’t want you to read the fine print. But the fine print may mean the difference between keeping your home and losing it. * Consider high up-front fees a red flag. You shouldn’t have to pay hundreds--or thousands--of dollars for housing assistance. Most reputable counselors provide free or low-cost counseling services.
If you think you’ve been the victim of a foreclosure rescue scam, contact your state and local consumer protection agencies immediately. Visit the Consumer Action website at consumeraction.gov/state.shtml for the nearest office. For more information, listen to “Find Foreclosure Counseling” in Home & Family Finance Resource Center.