Foreclosure rescue scams target homeowners struggling to keep up with their mortgage payments. Fraudsters posing as loan modification or foreclosure rescue companies can easily deceive vulnerable homeowners desperate to save their homes. Foreclosure rescue scams can result in homeowners losing their properties, affecting their financial stability and emotional well-being. Home Title Lock discusses common tactics fraudsters use in foreclosure rescue scams in this article.
1. Phony Loan Modification Services
Fraudsters often pose as legitimate loan modification services claiming they can help homeowners with their mortgage payments. They ask for upfront fees and promise that the homeowner’s mortgage payments will be lowered and their interest rate reduced. However, they never deliver on their promises, and the homeowner ends up with neither a loan modification nor a refund of the upfront fees paid.
2. Bait-and-Switch Scheme
Fraudsters often use the bait-and-switch scheme to deceive homeowners. They will lure homeowners with an offer that seems too good to be true, such as a low-interest rate or a principal reduction, only to switch the loan terms later. Homeowners will find a new loan with higher payments, interest rates, and unfavorable terms.
3. Bankruptcy Scams
Fraudsters may tell homeowners that filing for bankruptcy will save their homes from foreclosure. They promise to handle the bankruptcy process and even charge them upfront fees. However, the fraudsters fail to deliver, and the homeowner loses their home in foreclosure.
4. Phantom Help Scheme
The phantom help scheme happens when fraudsters offer to perform services that the homeowner can do for free or at a lower cost. For instance, they may provide foreclosure counseling or contact the homeowner’s lender. However, their services are often of minimal value, and homeowners end up paying for services they could have received for free.
5. Rent-to-Buy Scams
In rent-to-buy scams, a fraudster offers to buy a homeowner’s property and rent it back to them until they can repurchase the home. The fraudster then charges the homeowner a premium for rent, fails to make mortgage payments, and allows the property to go into foreclosure, leaving the homeowner without a home or refund.
6. Equity Stripping
Equity stripping happens when a fraudster convinces a homeowner to refinance their current mortgage and take out the equity in their home. However, the equity is used to pay fraudulent fees, and the homeowner will end up with a new loan with higher payments and unfavorable terms.
7. Phantom Sales
Phantom sales happen when the fraudster tells the homeowner their property was sold at auction and offers to repurchase it for a lower price. However, there was no auction, and the homeowner lost their home while the fraudster walked away with the profits.
Fraudsters may forge homeowners’ signatures on documents related to their homes, such as refinancing loans or second mortgages. Homeowners may not realize the documents are fraudulent until it’s too late.
9. False Promises
Fraudsters may make false promises to homeowners, such as that they can get a loan modification or find a new home for free. However, these promises are often empty, and the homeowner will lose their home in foreclosure.
10. Unauthorized Property Transfers
Fraudsters may convince homeowners to transfer ownership of their homes to avoid foreclosure. However, the deed is usually transferred to an entity controlled by the fraudster, and no mortgage payments are made, resulting in a foreclosure on the homeowner’s property.
Home Title Lock knows how foreclosure rescue scams can be devastating for homeowners who are already struggling. Fraudsters use various tactics to deceive vulnerable homeowners, making it difficult for them to recognize the signs of a scam. By being aware of these common tactics, homeowners can protect themselves from foreclosure rescue scams and keep their homes.