Fed to Run Foreclosure Scam Trailer in Movie Theaters

Foreclosure avoidance scams are on the rise. As more and more homeowners experience financial difficulties and fall behind on their mortgages, they become the targets of an army of con artists who seek to fleece them out of their money and even their actual homes in return for a promise of assistance.

In response, the usually staid Federal Reserve is doing something unusual - it's going Hollywood.

The Fed is releasing a 30-second public service announcement to warn consumers of typical foreclosure cons. The Wall Street Journal reports the PSA will be shown as a trailer in movie theaters in 14 high-foreclosure housing markets beginning April 9.

The PSA will have its initial run in theaters in Arizona, California, Georgia, Florida, Michigan, Nevada and Ohio, where reports of foreclosure scams are on the rise. It's a first for the Federal Reserve, which has never made a PSA before.

Scams come in various packages

Foreclosure scams come in a variety of packages. One of the most common is a solicitation by a company that promises to help a borrower restructure a mortgage or obtain other financial relief in return for a steep fee. The problem is that such services may only consist of filing paperwork that borrowers can easily do by themselves and that the "mortgage counseling" such firms offer is typically provided free of charge by nonprofit agencies or the government itself.

More severe scams may involve a "rescue," where the homeowner is persuaded to sign over the deed to the home in return for a promise of being allowed to stay on as a renter with an option to repurchase when his or her finances improve. In others, the homeowner is encouraged to sign documents that are supposed to be for a new loan that will solve his or her financial problems, but which actually deed the home over to the scammers. In both cases, the homeowner ends up losing the home.

Warning signs

The government-backed mortgage company Freddie Mac has says there are several indicators that someone may be targeting you for a foreclosure scheme. They are:

• Being approached by a stranger with an unsolicited "rescue" offer.

• Receiving an unsolicited call, mail or flyer about "foreclosure rescue" or saving your home.

• Participating in a complicated deal that you don't fully understand.

• Signing documents that have blanks or false statements. Regardless of what you are told, this is never okay.

The lender says the best solution when you face financial difficulties that may endanger your home is always to talk to your lender or a reputable counselor that you initiate contact with.