New sleazy mortgage scam aimed at residents facing foreclosure

Sure, all mortgage scams are sleazy, but this one seems particularly evil.

According to a story in a recent newsletter put out by Identity Theft 911, a company aimed at helping individuals and institutions from being victims of identity theft, one of the latest scams involves a "foreclosure expert" approaching a distressed homeowner and claiming that they can save the house. Their plan?

Pay the foreclosure expert $5,000, and they'll buy the house for a cheap price, and then the resident will pay the foreclosure expert a monthly rent. The resident gets to live in their home. The foreclosure expert gets to make some extra money. In a year or two, the resident gets the deed back from the foreclosure expert. Everyone's happy. Well, not so fast.

Real Estate Troubles

    A woman walks past a billboard for the Philippine American Life and General Insurance Co (Philamlife), the local unit of American International Group (AIG), in Makati City, Metro Manila, October 6, 2008. AIG, crippled by losses related to bad mortgages, said it has received offers for its Philippine insurance businesses and announced plans to sell its Thai consumer finance units.REUTERS/Cheryl Ravelo (PHILIPPINES)

    Reuters

    Jose Cuisia, the chief executive of Philippine American Life and General Insurance Co (Philamlife), the local unit of American International Group (AIG), speaks with journalists after a news conference in Manila October 6, 2008. AIG, crippled by losses related to bad mortgages, said it has received offers for its Philippine insurance businesses and announced plans to sell its Thai consumer finance units. REUTERS/Romeo Ranoco (PHILIPPINES)

    Reuters

    Customers enter the main offices of the Philippine American Life and General Insurance Co(Philamlife), the local unit of American International Group (AIG), in Manila October 6, 2008. AIG, crippled by losses related to bad mortgages, said it has received offers for its Philippine insurance businesses and announced plans to sell its Thai consumer finance units. REUTERS/Romeo Ranoco (PHILIPPINES)

    Reuters

    Customers walk past the main offices of the Philippine American Life and General Insurance Co (Philamlife), the local unit of American International Group (AIG), in Manila October 6, 2008. AIG, crippled by losses related to bad mortgages, said it has received offers for its Philippine insurance businesses and announced plans to sell its Thai consumer finance units. REUTERS/Romeo Ranoco (PHILIPPINES)

    Reuters

    The Wells Fargo logo is displayed outside a home mortgage office in Springfield, Ill., Friday, Oct 3, 2008. A battle broke out for control of Wachovia Friday as Wells Fargo signed a $15.1 billion agreement to buy the Charlotte, N.C.-based bank. (AP Photo/Seth Perlman)

    AP

    The Wells Fargo logo is displayed outside a home mortgage office in Springfield, Ill., Friday, Oct 3, 2008. A battle broke out for control of Wachovia Friday as Wells Fargo signed a $15.1 billion agreement to buy the Charlotte, N.C.-based bank. (AP Photo/Seth Perlman)

    AP

    The Wells Fargo logo is displayed outside a home mortgage office in Springfield, Ill., Friday, Oct 3, 2008. A battle broke out for control of Wachovia Friday as Wells Fargo signed a $15.1 billion agreement to buy the Charlotte, N.C.-based bank. (AP Photo/Seth Perlman)

    AP

    The Wells Fargo logo is displayed outside a home mortgage office in Springfield, Ill., Friday, Oct 3, 2008. A battle broke out for control of Wachovia Friday as Wells Fargo signed a $15.1 billion agreement to buy the Charlotte, N.C.-based bank. (AP Photo/Seth Perlman)

    AP

    Mexican billionaire Carlos Slim speaks during an interview with foreign correspondents in Mexico City September 30, 2008. Private investors should take stakes in U.S. banks to save them from financial ruin, with the government buying failed mortgage debt only as a last resort, Slim said on Tuesday. REUTERS/Felipe Courzo (MEXICO)

    Reuters

    Mexican billionaire Carlos Slim speaks during an interview with foreign correspondents in Mexico City September 30, 2008. Private investors should take stakes in U.S. banks to save them from financial ruin, with the government buying failed mortgage debt only as a last resort, Slim said on Tuesday. REUTERS/Felipe Courzo (MEXICO)

    Reuters

Todd Lackner, a San Diego mortgage fraud expert interviewed for the article and who has worked on at least 400 of these types of cases, says that this might all work except that, of course, it never does. Shortly after the homeowner pays the foreclosure expert a fee along the lines of $5,000 and signs over the deed to the house, the so-called savior will then use any excuse that they can to kick the former homeowner out of their home.

In some cases, according to Lackner, homeowner-turned-renters have been evicted for being 10 minutes late with their rent check. And then the foreclosure expert has a new house, and I'm assuming then that the evicted victim still owes the bank for whatever they haven't paid on their home.

It sounds outlandish, but these scams are everywhere. Fraudulent mortgage loans, in fact, went up 42% in the first three months of 2008 compared to the first three months in 2007. The "companies" usually have very honest and bland sounding names like Nationwide Lending Group and Foreclosure Prevention Services, which has to drive the reputable companies that are out there, crazy. So if you do have a house that is teetering on the foreclosure abyss, and you want help and wonder where to turn, try going to the Department of Housing and Urban Development's web site, which has a lot of good, solid resources, or just do what they'll you to do and call the Homeownership Preservation Foundation at 1-888-995-HOPE (4673).

And the best rule of thumb. If you're approached by a company or individual who claims that they can help you avoid foreclosure, and you have to pay them money instead of your mortgage company, don't. And if their services require you to pay them money while they negotiate with your mortgage banker--don't--because they won't--and meanwhile, your monthly mortgage will continue to go unpaid and be ignored. That's another common ploy of a lot of these scammers.

Geoff Williams is a freelance journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).




Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Add a Comment

*0 / 3000 Character Maximum