Avoiding Short Sale Scams
People who are facing foreclosure will try just about anything to turn things around. Unfortunately, scam artists are well aware of this fact; they have no qualms about taking advantage of people who are facing this desperate situation. To avoid falling into a scam artist's trap, it helps to be aware of the most common foreclosure scams. The following information will clue you in to the most common scams and provide practical advice on recognizing and avoiding them.
Know a Foreclosure Scam when You See One
Due to the dismal shape of today's economy, there are many foreclosure rescue scams out there. Luckily, they are fairly well-documented. Before digging any deeper, though, it's important to note that bankruptcy is not a permanent solution to foreclosure; while foreclosure proceedings may be temporarily halted when a bankruptcy is filed, they usually commence after a period of time. Similarly, companies that promise to use shady debt elimination strategies to relieve you of your mortgage obligation are almost certainly up to no good.
A few additional scams include:
Rent to Buy - Mortgage lenders publish lists of houses that are facing foreclosure. Unscrupulous companies use this information to target their next victims. If a company swoops in and offers to take your title in exchange for renting your home back to you, run. At best, you'll face exorbitant fees and ultra-high monthly rent payments; at worst, you could end up losing your home almost from the get-go.
Intermediary to Lender - Legitimate foreclosure help always includes the participation of the mortgage lender. If a company comes along and promises to act as an intermediary between you and the bank, refuse the offer. Such scam artists usually collect your mortgage payments, too, promising to pass them along to your lender. In reality, they usually pocket those payments, along with a slew of high upfront fees.
Affiliation with Government - The U.S. government has plenty of reputable and effective foreclosure avoidance options out there. That being said, the government can handle its own business - it doesn't farm out its services to a huge array of mom-and-pop operations. Beware of companies that claim affiliation with the government; be wary of terms like "government-approved" and "federal." If you'd like to take advantage of a government program, you can do so through your original mortgage lender.
Tips for Avoiding Scams
These straightforward tips will help you steer clear of foreclosure scams:
Always Make Payments Directly to Lender - There is never any good reason to forward your monthly mortgage payment to anyone other than your lender. Legitimate counselors and other services will not ask you to do this.
Stay in Touch with Your Lender - Always keep your lender in the loop about any help that you're thinking about getting. After all, their participation is going to be essential.
Don't Pay Upfront Fees - Some legitimate foreclosure assistance programs will eventually ask you to pay fees. However, they will not ask for those fees upfront, before rendering any services. Never part with your hard-earned cash until you've seen the company in action.
Include a Lawyer in Deed-Related Activities - Anytime a transfer of deed comes into play, make sure you bring an attorney on board. There's simply too much risk involved otherwise.
Read before Signing - Don't allow yourself to be rushed into signing anything. Always take as much time as you need to read every single document. If necessary, consult a lawyer before signing.
Report Suspicious Activities - If you are targeted by a scam artist, contact a local consumer protection agency and report the issue.
As promising as some foreclosure assistance scams may sound, they will only make the situation worse. If something seems too good to be true, it probably is. There are plenty of legitimate foreclosure assistance options out there - take your time to find the one that is right for you.