Facing foreclosure can be traumatic, and unfortunately people in difficult circumstances make easy prey for the unscrupulous. As foreclosure rates climb across the country and more and more homeowners find themselves at risk of losing their homes, predators are springing up nearly as quickly to profit from their distress.
Homeowners desperate to keep their homes may put their trust in the wrong people, and in doing so may lose more than they'd ever expected.
Several states have taken action against predatory "mortgage rescue" companies and individuals claiming to offer services to stop foreclosure over the past two years.
Foreclosure rescue scams take many forms, but here are a few examples of operations shut down, sued, or otherwise sanctioned by some states-they're representative of some of the most common foreclosure rescue scams:
Although these are some of the most common foreclosure rescue scams at the moment, there are as many means of deception as there are people in difficult circumstances. If you're looking to stop foreclosure, don't let desperation push you into uninformed or hasty decisions.
In particular, beware of any company that instructs you not to talk to your mortgage lender, or who makes promises (such as, "We'll sell the house back to you at a later date.") that aren't part of a written agreement.
Make sure that you read and understand everything that you sign, and if you don't understand, have someone you trust or a local attorney review the document before you sign. If the person or company you're dealing with does not want you to have the paperwork reviewed by an outside party or discourages talking to an attorney, that should be a red flag that they may have something to hide.
There are a variety of options available to stop foreclosure, depending upon the specifics of your situation. For people with significant equity in their homes who are not more than 90 days past due, refinancing is often a viable alternative to stop foreclosure.
For those who can't refinance, a debt workout plan may be the answer. And even if negotiations and refinancing don't work out for a homeowner, bankruptcy may stop foreclosure.
Whatever your specific circumstances, do your homework. Make sure that you're dealing with a reputable company or attorney, that you have read and understood everything that you sign, and that you aren't relying on verbal promises that may not be enforceable.