Crooks Impersonate Foreclosure Counselors to Scam Homeowners

By Pamela Yip, The Dallas Morning News


Sept. 20—One of the ugliest effects of this economic downturn is how it’s brought out crooks who prey on financially distressed homeowners by ensnaring them in home-loan modification scams.

“Consumers are frightened and frustrated trying to solve their mortgage issues,” said JoAnn DePenning, statewide coordinator of the Texas Foreclosure Prevention Task Force. “Unfortunately this created just the right scenario for scam artists to come in and victimize people and endanger the homeowners with foreclosure.”

The task force is composed of representatives from government organizations, the financial industry and nonprofit groups all working to avert home mortgage foreclosures. The task force and other groups recently held a summit in Dallas on the problem of loan scams.

“They’re still pretty bad,” said Celine Thomasson, spokeswoman for NeighborWorks America, a national network of community development and affordable housing organizations.

“As unemployment or underemployment continues to hit American homeowners, the more scammers know they can prey upon vulnerable people,” she said.

Loan modifications typically involve a reduction in the loan’s interest rate, an extension of the loan’s term, a different type of loan or any combination of the three.

Loan modification scams come in various flavors. Here are some of the most common:

Phony counseling or foreclosure rescue scams: The scam artist poses as a counselor and tells you he can negotiate a deal with your lender to save your house, but only if you first pay him a fee.

He may even tell you not to contact your lender, lawyer, or housing counselor and that he’ll handle all details. He may even insist that you make all mortgage payments directly to him while he negotiates with the lender.

But once you pay the fee, or a few mortgage payments, the scammer disappears with your money.

To protect yourself, avoid a company or person who asks for a fee in advance to work with your lender to modify, refinance, or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.

Also, don’t stop communicating with your lender. That’s the worst thing you can do. The minute you have trouble paying your mortgage, contact your lender.

And never send a mortgage payment to anyone other than your lender.

Fake government modification programs: Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, upfront fees to qualify for government mortgage modification programs.

The scammer’s company name and website may sound like a real government agency. You may even see words on the site like federal, TARP, or others related to official government programs.

Don’t be fooled. Before you sign up, contact your lender, who can tell you if you qualify for any government programs. And you don’t have to pay to benefit from these programs.

Bait and switch: The scam artist may try to convince you to sign documents for a new loan modification that will make your existing mortgage current.

This is a trick. You’re actually signing documents that surrender the title of your house to the scam artist in exchange for a so-called rescue loan.

Rent-to-own or lease-back scheme: The scammer tries to deceive you into signing over the deed to your home and promises that you can remain in the house as a renter and eventually buy it back

Usually, however, the terms of this deal are so demanding that the buy-back becomes impossible. The homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.

A variation of this scheme has the scammer raising your rent over time to the point that you can’t afford it. After missing several rent payments, you’re evicted, leaving the scammer free to sell your house.

Don’t be afraid to report any scams.

“Many homeowners fail to report because they don’t see themselves as victims of a crime,” Thomasson said. “Instead they might think they made a poor business decision or that that they misplaced their trust. Even those who do acknowledge that there is crime realize that it is likely that the company or person who scammed them is gone and not going to be found and that they likely would not get their money back.”

If you find yourself the victim of a scam, report it so that more people aren’t victimized. It will help authorities build cases against the scammers.

URL to original article: http://www.houselogic.com/news/articles/Crooks-Impersonate-Foreclosure-Counselors-to-Scam-Homeowners/