Friday, Nov. 28, 2008

Tips on avoiding rescue scams

The Office of the Comptroller of the Currency, which was created by Congress to ensure national banks are safe and serving the needs of customers, gives these tips to avoid foreclosure rescue scams:

Fake foreclosure counselors — Watch out for anyone who says he or she is a "foreclosure consultant" or "mortgage consultant," or who markets himself as a "foreclosure service" or "foreclosure rescue agency." If someone offers to negotiate with your lender or delay foreclosure for a fee, carefully check his or her credentials, reputation and experience. Real housing counselors certified by the U.S. Department of Housing and Urban Development don't charge for their services.

Lease-back or repurchase scams — Be very suspicious if someone offers to pay your mortgage and rent your home back to you. This scheme often involves signing over the deed to your home to the con artist. The con artist may promise to sell your home back to you, but this may be very difficult under the contract terms. Signing over the deed gives the con artist the power to evict you, raise your rent, sell the house or steal your home equity. You still will be responsible for your mortgage, so if the con artist stops paying it, your lender would have the right to foreclose on your home and damage your credit record.

Refinance fraud — Look out for people posing as mortgage brokers or lenders and offering to refinance your loan so you can afford the payments. Con artists may trick you into signing over the ownership of your home by saying that you are signing documents for a new loan. Signing over the deed to your home exposes you to the dangers described above. Even if you are a victim of fraud, you could still lose your home.

Bankruptcy schemes — Several scams attempt to abuse the bankruptcy laws. Example: A con artist may ask you to give a partial interest in your home to one or more people. Each holder of a partial interest can then file bankruptcy, one after another. The bankruptcy court will issue a "stay" order each time to stop foreclosure temporarily, but that does not excuse you from making payments or repaying the full loan amount.