A foreclosure "rescue" scam could cost you your home. While not all companies that approach you to help you save your home are "scam artists", you need to be very cautious if someone does offer help that sounds too good to be true. Don’t sign anything until you have done your homework first. Call a housing counselor or your lender and ask them about the deal before making a commitment.
Just remember, if something sounds too good to be true, it probably is!
Scenarios to watch out for
- Unethical consulting services - Some foreclosure rescuers try to pass themselves off as legitimate foreclosure counselors.They may charge you for services you can easily do for yourself, or take steps that actually hurt you. As a result, you receive little or no help in stopping the foreclosure from taking place. Remember, you can talk to a housing counselor for free, who can advise you on the best steps to take when trying to save your home from foreclosure.
- Deals that let you stay in your home - Some foreclosure rescuers will offer to bring your mortgage up to date and let you stay in your home until you can pay them back. The scammer "bails you out" by helping get rid of your house. The way the scammers get rid of your house varies, but each method ends with you surrendering the title to the house on the promise that you can stay on as a renter and buy the house back once things have been "fixed." The scammer usually sets the rental price at a level that you cannot afford, and then they evict you for failure to pay the rent. In the end, of course, you can't buy the house back and the scammers get most, if not all, of your equity.
- Bait and switch/fraud - Some foreclosure rescuers will simply lie about what they will do for you. The scammers will tell you that you are signing documents for a new loan that will solve your problems. In reality, you are signing forged documents that will give the scammers ownership of your home. To make matters worse, you will still owe for the mortgage but will no longer have the home.
How do the scammers find you?
A scammer finds homeowners in need of "help" through local public-foreclosure notices.
They advertise their service by dropping a card or flier on your doorstep or calling you. They also post ads in public places. You should ignore posters, fliers and especially handwritten notes offering help for your foreclosure.
How do the scammers hook you?
At the first meeting, the scammer builds up your hopes and promises a fresh start. There are also empty promises made such as that they will sell the house back to you at some point.
The scammer will recommend that you break off contact with the lender and any counselor that you may have been working with. This is the exact opposite of what you should be doing. If you are in a foreclosure, you need to be in contact with your lender to find out what you can do to fix the problem.
These scams are often perpetrated by people of similar ethnic, racial, religious or age groups.
What to do if you get caught in a foreclosure rescue scam?
The New Hampshire legislature recently enacted a law, RSA 479-B, designed to protect you from misleading foreclosure consulting services. Companies offering to pay off your mortgage arrears or provide foreclosure consulting services must comply with this law!
In general, a foreclosure consultant shall not enter into any agreement or provide any services on your behalf until you have executed a foreclosure consulting contract. A foreclosure consulting contract must:
- Be written in the same language that you speak;
- Fully disclose the exact nature of the foreclosure consulting services to be provided to you, and the total amount and terms of the foreclosure consultant’s compensation;
- Be dated and signed by you and the foreclosure consultant in front of a notary public or justice of the peace; and
- Be accompanied by a “notice of cancellation,” which tells you how to cancel the contract.
A foreclosure consultant who is going to take title to your home must also give you a “notice of loss of ownership” which sets out the terms of the transfer in detail and notifies you of your right to cancel the transfer within five business days.
This is a very limited description of the protections offered to you by RSA 479-B. For the full text of the legislation creating RSA 479-B, please follow this link. To understand how this law may affect you and your particular situation, please contact an attorney. If you need help finding or affording an attorney, please visit our NH Based Legal Assistance page.
If you receive a scam in the mail, contact the US Postal Inspection Service .