When you are behind on your mortgage payments and fear losing your home, you may feel overwhelmed and unsure who to trust. With so many companies out there claiming to help you get back on your feet, it’s all too easy to fall prey to foreclosure scams.
Unfortunately, these scams won’t help you save your home. They simply will bring you closer to losing your home, bleeding you of your precious savings in the meantime.
If you’re behind on your mortgage or have fallen victim to a foreclosure scam, a Cleveland bankruptcy lawyer may be able to help explain your options for keeping your home and getting out of debt.
Three Types of Foreclosure Scams
Foreclosure scams are far too common. There are three basic types of foreclosure scams used to take advantage of homeowners:
- High fees and no work — This first scam is often the hardest to identify. Scammers posing as legitimate consumer loan specialists or foreclosure consultants claim to take over your case for you and work on your behalf with the mortgage company to prevent foreclosure. In reality, scammers charge exorbitantly high fees for simple tasks or even charge fees without actually performing services at all. Sometimes, these scammers even claim to work out a payment plan with the mortgage company that the victim pays into — never discovering that the scammer is simply pocketing the money, rather than paying the mortgage company, until it is too late.
- Sale and lease — In this type of scam, a company claims that they can help you pay the mortgage until you can better afford it by purchasing the home at a very low price and then renting your back to you until you can qualify for another mortgage to repurchase it. Unfortunately, the buyback provisions are usually incredibly onerous and the rent usually continues to increase drastically until you can no longer afford it and are evicted. Sometimes, homeowners find that the mortgage is never even paid, leaving you with no home, no way to pay the arrearage, and a serious black mark on your credit for the unpaid mortgage and resulting foreclosure.
- Sneaky thievery — This scam is often the worst for a homeowner. In this scam, a supposed foreclosure consultant will bring documents for the homeowner to sign, either claiming that they will bring the mortgage current or that they are a loan agreement that will allow you to catch up your mortgage with a specific payback plan. In reality, the documents are a sneaky purchase agreement that tricks the homeowner into surrendering ownership of the home. They are then quickly evicted without recourse.
Seven Tips for Protecting Yourself from Foreclosure Scams
All of these methods can quickly cause you to lose you your home while doing untold damage to your credit and finances. That makes it critical when you’re falling behind on mortgage payments to recognize and protect yourself from foreclosure scams.
The following seven tips can help you protect yourself from foreclosure scams:
- Only work with foreclosure consultants approved by the U.S. Department of Housing and Urban Development (HUD) or established consumer protection lawyers when seeking help for a delinquent mortgage.
- Never pay upfront consulting fees or work with consultants that request them. These types of fees are illegal and warning signs that a deal is a scam.
- Never sign documents without reading them thoroughly, as you never know what provisions they could entail. It can also help to get a consumer protection lawyer to look at documents and explain the details.
- Always pay your mortgage payments directly to your loan servicer — never to a foreclosure consultant. This prevents fraud.
- Never transfer your home title to someone else unless you intend to sell, and only then with the help of an attorney and a real estate agent. Once the title is in someone else’s name, you no longer have control of the property — and you still are responsible for the mortgage even if you don’t own the home.
- Be wary of anyone who gives you a guarantee of success. A reputable foreclosure consultant can offer help, but can’t guarantee that you will avoid foreclosure. These guarantees should set off warning bells.
- Trust your instincts and seek help if you suspect a scam. A consumer protection attorney can help you get in touch with the proper authorities and start the legal process to recover any money you have paid or to take action against the scammers.
When it comes to foreclosure scams, if it sounds too good to be true, it probably is. Take precautions to protect yourself and your home and only work with professionals you can trust. This will help you to avoid becoming an unwitting victim of a scam.
How a Cleveland Bankruptcy Lawyer Can Help
In the meantime, it’s important to remember that you have options other than foreclosure if you are falling behind on payments. A Chapter 13 bankruptcy might allow you to enter an affordable payment plan while keeping your home.
Talk to a Cleveland bankruptcy lawyer at Luftman, Heck, & Associates today at (216) 586-6600 to discuss your options. We can help you honestly assess your situation and decide what may help you best get back on track.