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Foreclosure Rescue Scams

Learn the facts about loan modification scams.

For guidance and to report a scam call 1-888-995-HOPE (4673)



NeighborWorks America's Loan Modification Scam Alert Campaign

Loan modification scams are proliferating at a rapid pace. Every day, scam artists prey on unsuspecting homeowners who are facing foreclosure. These homeowners are losing thousands of dollars and their homes—lured by the promise of loan modification help.

To combat this issue, Congress asked NeighborWorks America to launch a national public education campaign. The Loan Modification Scam Alert Campaign empowers homeowners to protect themselves against loan modification scams, find trusted help and report illegal activity to authorities. Learn the facts. Protect yourself.

 

Tips to Avoid Foreclosure Scams

Facing foreclosure is a terrifying time for any homeowner. With the foreclosure rate at an all-time high and the nation in economic crisis, as many as 8 million American homeowners are expected to face foreclosure through 2012, according to industry studies.

NeighborWorks America urges homeowners who need help to beware of foreclosure rescue scams, and offers the following tips to avoid them:

  • Never use any ad, person, or company that approaches you and claims to be able to “stop foreclosure now” for a fee.
  • Never release your financial information online or over the phone to a company you know nothing about.
  • Never send your mortgage payment, or any payment, to a company other than your mortgage lender.
  • Visit findaforeclosurecounselor.org to find HUD-approved organizations that offer free, legitimate foreclosure counseling.
  • If you prefer to speak to a counselor over the phone, call the Homeowner’s HOPE Hotline at 888-995-HOPE for free foreclosure prevention counseling by expert counselors at HUD-approved nonprofit counseling agencies. The hotline is open 24 hours a day, seven days a week, in English and in Spanish. Counseling is also available in 20 additional languages by request.
  • Contact your mortgage lender. Contrary to what a foreclosure scammer will tell you, you should contact your lender the minute you have trouble making your monthly payment.
  • If you suspect a scammerhas approached you or victimized you, contact your local Better Business Bureau or state attorney general’s office. In addition to reporting a scam locally, you can file a complaint with the Federal Trade Commission (FTC). To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant: https://www.ftccomplaintassistant.gov/ or call 1-877-FTC-HELP (1-877-382-4357)



Top Three Foreclosure Scams To Avoid from the FTC

Unfortunately scammers have no problem taking advantage of homeowners who are facing foreclosure. The Federal Trade Commission lists the top three foreclosure scams to be aware of as the housing crisis deepens.

    1. The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges outrageous fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
    2. The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
    3. The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.


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