One thing is certain: There always will be some con artist who wants to take your money. Unfortunately, those already facing financial hardships are even more vulnerable to scams.
Foreclosure is prime territory for a scam. Residents facing the threat of losing a home quite often are flooded with overtures from individuals or companies offering to help. Now, there's absolutely nothing wrong with spending money in exchange for a worthwhile service. But in many cases, the services offered to people in foreclosure are nothing more than worthless scams looking to exploit your hardship. Instead of helping, they will only compound your financial problems.
Foreclosure scams target people whose home mortgages are in trouble. Scam operators advertise over the Internet and in local publications, distribute fliers and even contact people whose homes are listed in foreclosure notices. There are many different approaches to these scams. They may promise to take care of your problems by offering to negotiate with your mortgage lender in exchange for a fee. They may offer to obtain refinancing for you. Sometimes they ask you to make your mortgage payments directly to the scam operator. They may even ask you to hand over your property deed and then offer to lease the residence back to you so you can stay in your home.
Any of these pitches should send up warning flags! And here's the reason why: Instead of contacting your lender or refinancing your loan, scam operators will pocket all of the money that you pay to them. They may file a bankruptcy case in your name to give the elusion that they are taking action to clear up your problems. But this is only a temporary device, since bankruptcy doesn't stop foreclosure, but merely puts it on hold. When the scam artist walks away after the filing, the bankruptcy petition will be dismissed and the foreclosure proceeding will continue. If this happens, you could end up losing your home as well as any money paid to the scam operator.
Many companies, some reputable and some not, will offer to negotiate or consolidate your debt to help you out of a mortgage jam. The catch is that you will be asked to pre-pay for these services. The truth is that in many cases, the services don't offer anything that you can't do on your own. And there are many non-profit debt counseling agencies that will provide the same services free of charge.
If you can't pay your mortgage, the best advice is to contact the mortgage lender or a lawyer for help. Don't fall for a pitch or a solicitation. Instead, take the time to find a reputable source that can help you make good decisions. In the meantime, be extremely cautious if any individual or company:
Calls itself a mortgage consultant, foreclosure service, pre-foreclosure specialist, debt manager, tax advisor or some other similar name.
Contacts or advertises to people whose homes are listed for foreclosure.
Collects an up-front fee before providing a service.
Tells you to make your mortgage payments directly to them.
Tells you to transfer your property deed or title directly to them.