Foreclosure Fraud Protection

Every budget is stretched to the max these days, and it's easy to fall behind on your mortgage. Don't let the stress of possible foreclosure cloud your judgment. You could fall prey to foreclosure fraud.

As the saying goes, "There's a sucker born every minute." Lately, there's a scam born every minute to take advantage of people struggling to pay their mortgages. With foreclosure rates skyrocketing, fraud is occurring more frequently across the country. If you're considering foreclosure, be aware of this fraud and how to protect yourself from becoming a victim.

A confidence game

Foreclosure fraud can happen to anyone. While the schemes vary, most start out offering solutions to homeowners in distress. The unscrupulous con artists find their targets in foreclosure notices published in newspapers. They start out by trying to gain your confidence. You'll receive flyers in the mail, or delivered to your home, or the 'company' may solicit you door-to-door. Often, they'll be of the same ethnic or social-economic background as you, and convince you to cut off contact with your mortgage holder. They'll tell you that they can prevent the foreclosure.

Too good to be true

Once the homeowner "bites" on the offer of help, the 'company' demands high fees for phoning the mortgage holder to negotiate a new loan or other options to prevent foreclosure. Time passes, and the homeowner discovers that the 'company' actually did nothing, and it's too late. Most schemes, at some point, include asking the homeowner to sign over title of the property to them. They may tell you that you can rent the property for a period of time, eventually regaining ownership. It may sound like a deal too good to be true. And it is. These rental agreements usually end up requiring a final balloon payment that the homeowner can't pay. He then ends up losing the property. Sometimes, he's still paying on a home he no longer lives in or owns.

Protecting yourself

Because foreclosure fraud is relatively new, federal and state laws are just being developed to help prevent them and protect consumers from them. In the meantime, there are several ways to protect yourself from losing your biggest asset:

• If you're struggling to pay your mortgage, stay in touch with the mortgage holder. They would rather work with you than foreclose.
• If you're in or near foreclosure and are approached by a company that says it can help, be cautious if it calls itself a "mortgage consultant" or "foreclosure service."
• Don't sign any document without an attorney's review, or sign over or transfer your property to the company.
• Don't pay your mortgage payments to any company other than your mortgage holder.
• Above all, don't panic. A clear head will allow you to make better decisions.

No one likes the threat of foreclosure; the good news is, however, that your mortgage holder will work with you. Communicate with them, be cautious, and stay calm, and you can avoid foreclosure fraud.