The Newest Predators for Stressed Homeowners:

Foreclosure Rescue and Loan Modification Scammers

Michelle Y. Graves

“The Money Lady”

I am writing this article today in the hope that the couple I spoke with last week will stop sending their hard-earned money to a foreclosure scammer.  He is destroying their lives!

In today’s challenging economic environment, many homeowners are not only experiencing difficulty in making their monthly mortgage payments, but they face the prospect of losing their home through foreclosure.  In desperation, many are turning to the newest breed of ‘home wreckers’, criminals who charge large upfront fees and falsely guarantee to rescue a home from foreclosure.  In some of the worst cases, homeowners have become victims of identity theft or were tricked into signing away their ownership of a house and being evicted!  These predators advertise with little impunity on television, radio, internet and through mail solicitations.  I have watched their ads and, I must truthfully confess, they are really smooth, especially if you are stressed and your back is against the wall.  However, if you think you have problems now, just wait until you get involved with these scammers!  You will find yourself paying thousands of dollars for nothing and still lose your home.  Foreclosure rescue is big business in America today.  Beware! 

Here are a few tips on how to protect yourself.  Remember, a fool and his money are soon parted.

1. Can I truly afford to keep my home? Evaluate your present financial circumstances and determine whether keeping your home is a sensible decision.  If you are unemployed with little prospect of securing a job; if you have exhausted your savings; and if your home has little or no equity, you may want to consider legal options, including a deed in lieu of foreclosure (know as ‘turning in the keys’) or bankruptcy.  Contact your local bar association for attorneys who specialize in bankruptcy.  Usually there is no fee for an initial consultation and you can explore your options to see what works best for you.  This is an extreme step and should be considered as your ‘last resort’.

2. Deal only with lenders, businesses and other organizations that you already know or that have been recommended.  Listen, your lender does not want your home … especially in today’s depressed real estate market.  The foreclosure process is not only lengthy but costly to the bank.  There are organizations that can help you for no charge or a small fee.  Find one through groups such as NeighborWorks America (www.nw.org) or by calling 1-888-995-HOPE (4673).  For a local counseling agency certified by the U.S. Department of Housing and Urban Development (HUD) visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call 1-800-569-4287.  The Obama Administration’s 'Making Home Affordable’ program is designed to help distressed mortgage borrowers avoid foreclosure or overcome obstacles to refinancing their loan.  While participation by lenders and loan servicers is voluntary, the U.S. Treasury is offering incentives to servicers to modify loans to make them affordable.

The website www.makinghomeaffordable.gov provides homeowners with detailed information about the programs.

3.  Consider a reverse mortgage.  If you are a senior and over the age of 62, a reverse mortgage may be an alternative to foreclosure.  Depending upon your age and the amount of your mortgage balance, this product could pay off your delinquent mortgage entirely.  Visit www.aarp.org for more information on the reverse mortgage program.

4. Do not be afraid to talk to your lender directly and make  your mortgage payments directly to your lender or the mortgage servicer.  Some scammers will tell you to send your payments directly to them instead of the lender.  Your money, and the scammer, will be gone. 

5. Use common sense.  After more than thirty years of handling money, I remain amazed at how gullible many people are.  Be suspicious of unsolicited offers by phone, e-mail or even a knock on your door (yes, they are bold).  Do not believe any advertisement that says the company is part of a government-endorsed mortgage assistance network or they are affiliated with the lender.  Check your local Better Business Bureau or state consumer protection office before speaking with any representative.  Be especially wary of any organization that says it guarantees foreclosure relief or has a near-perfect success rate. Nothing could be further from the truth.  Remember, these ‘home wreckers’ specialize in preying on the financially naïve. 

6.  Do not let pride be your downfall.  If you believe you are already caught up in a scam, alert your state Attorney General and federal authorities.  Consider retaining the services of an attorney to help you undo any of the damage. 

Michelle Y. Graves, “The Money Lady” has been involved in the fields of banking and investments for over thirty years.  She was the first African-American woman inducted into the Ohio Women’s Hall of Fame for her achievements in banking and has been a frequent contributor to the Cincinnati Herald on money matters.