Common Foreclosure Scams: The Hidden Dangers in the Housing Market

by | Jun 29, 2022 | Foreclosure

Don’t Be Foreclosed Upon by a Scam: Know Your Rights

 

Foreclosures are once again on the rise. Many Americans face challenges in a time of high housing costs, rising mortgage rates, economic uncertainty, and the end of COVID-19 foreclosure protections. According to a recent report from MarketWatch, foreclosures are up in every state. In the first quarter of 2022, there was a 67 percent quarterly increase in new foreclosures compared to the fourth quarter of 2021 and 188 percent compared to the prior year.

Sadly, foreclosure scams remain a very serious problem. Unscrupulous parties try to take advantage of homeowners facing foreclosure who are struggling and desperately trying to save their homes.

At the Law Offices of Wenarsky & Goldstein LLC, we want to ensure people have the knowledge and resources to avoid scams. Our New Jersey foreclosure attorney highlights some of the most common foreclosure scams and shares tips on protecting yourself.

 

How Do Foreclosure Scams Work?

 

Foreclosure scams are schemes designed to trick homeowners into giving away their money, home or both. Often the con artists target vulnerable homeowners who may not fully understand foreclosure laws and procedures.

Typically, a scammer will approach a homeowner with an offer that is too good to be true. They might promise to save your home from foreclosure for an upfront fee or tell you they can eliminate your mortgage debt. Unfortunately, these promises are often empty and the homeowner ends up losing their money and home.

 

Four of the Most Common Foreclosure Scams

 

Internet and Phone Foreclosure Scams

With internet and phone foreclosure scams, fraudsters try to find struggling people. They will then make them false promises that they can help them save their home. You will often be asked for some form of payment.

In reality, these scammers are typically just trying to take your money. The scammer will misrepresent their services—and maybe even their identity—to get as much as possible out of the victim.

 

Mortgage Refinance Scams

While there are legitimate mortgage refinancing services, scammers often tout significant refinancing to take advantage of desperate homeowners.

A scammer may pose as a mortgage broker. They may even tempt you with wholly fraudulent mortgage foreclosure rescue documents to try to get an initial payment out of you before they run away without doing anything at all to save your home.

 

Scams on Lease-Back and Repurchase

Be very skeptical of a lease-back and repurchase strategy as a tool to avoid foreclosure. It is one of the most common types of mortgage foreclosure scams. A scam operator will convince the homeowner to “sign over” the deed to the property. They promise to clear the delinquent debt and repair your credit while allowing you to stay in your home. Most often, they are simply trying to push you into an unfair agreement through which they can take your property through an eviction.

 

Equity Skimming

Equity skimming is a type of foreclosure scam through which a scammer will try to access your property to squeeze out any remaining equity. They will try to tell you to “give” them the property and move out immediately. They will then take over your mortgage payments and rent out the house. In reality, equity skimming means collecting as much rent as possible while not making any mortgage payments. The house could quickly end up in foreclosure.

 

Other Foreclosure Scam Tactics:

 

  • Phantom help: A scammer may claim to be a counselor or expert but is only out for your money.
  • Bait-and-switch: A homeowner thinks they are signing documents to bring the mortgage current. Instead, they unwittingly sign over ownership of their home.
  • Fake government programs: Scammers often pose as government agencies or affiliated with government programs to defraud homeowners.

 

How to Protect Yourself from Foreclosure Scams

 

Foreclosure scams often target people who are afraid and under financial pressure. They will not hesitate to scam you out of the last few dollars in your account. Here are some helpful tips on how to protect yourself from foreclosure scams:

Be Wary of Promises and Pressure

  • Guarantees: No reputable company can guarantee the stopping of foreclosure. Beware of anyone making such claims.
  • Urgency: Scammers often pressure you to act quickly, claiming limited-time offers. Take your time, and don’t be rushed.
  • Upfront Fees: Legitimate services rarely require an upfront fee. Be wary of anyone demanding money before providing help.

Do Your Research

  • Company: Check online reviews, ratings, and complaints. Verify their registration with relevant organizations like the Better Business Bureau.
  • Individual: If dealing with someone directly, research their background and licenses. Never share personal information without verification.
  • Options: Explore options like loan modification, forbearance, or refinancing before considering any service. Some government programs offer free assistance.

Protect Yourself

  • Never sign blank documents or those with errors/false statements.
  • Read and understand everything before signing. Seek legal advice if needed.
  • Never share financial information or make payments directly to the service provider. Pay your mortgage lender directly. If you are unsure, contact your lender to verify the legitimacy of any request.
  • Report suspicious activity to authorities like the Federal Trade Commission or your state’s Attorney General.

 

There are Real Options Available: An Experienced Lawyer Can Help

 

The unfortunate reality is that people and families who are facing mortgage foreclosure remain a target of scammers and fraudsters. These bad actors know that people desperately want to save the house that they turned into a home. Sadly, unscrupulous individuals and companies exploit the situation by providing false hope. They use false hope as a means to commit fraud.

Some good news: real legal options are available for financially distressed homeowners. While pandemic-related foreclosure protections have faded, New Jersey has made dedicated funding available to help people. You may qualify for assistance through the New Jersey Emergency Rescue Mortgage Assistance (ERMA) program.

Another potential option is bankruptcy protection. Depending on the specific circumstances of your case, consumer bankruptcy protection could potentially stop and fix a mortgage foreclosure. An experienced attorney like New Jersey and New York bankruptcy lawyer Wenarsky & Goldstein will help you navigate the legal process. They will also ensure you don’t fall victim to foreclosure scams.

Don’t let scammers take advantage of your situation. Explore your legal options and seek professional assistance to protect yourself and your home.

 

Call Our New Jersey Personal Bankruptcy and Foreclosure Attorney Today

 

If you are struggling with mortgage foreclosure or have questions about your financial situation, contact an experienced bankruptcy and foreclosure attorney today. An experienced lawyer can help you explore options to protect your home and financial future.

At the Law Offices of Wenarsky & Goldstein LLC, we are committed to helping our clients navigate some of life’s most significant financial challenges. If you have any questions or concerns about bankruptcy, foreclosure, and your legal options to save your home, our legal team is here to help.

Contact us today to set up a completely confidential consultation with an attorney. We provide personal bankruptcy and foreclosure representation throughout North Jersey and New York.

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