Foreclosure Rescue Scams
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What Is a Foreclosure Rescue Scam?
A foreclosure rescue scam is a type of real estate fraud that targets property owners whose home is facing foreclosure. These types of scams often target homeowners who have defaulted on their mortgage and who are desperate to save their property from foreclosure.
Foreclosure rescue scams can be perpetrated in many ways, but in most cases it involves a buyer or investor causing the homeowner to be forced out of the residence. Some schemes actually involve legal transactions, but many of them can involve illegal and fraudulent actions such as charging illegal real estate fees. Foreclosure rescue scams are also called mortgage relief scams, foreclosure rescue schemes, and other terms.
Common Foreclosure Rescue Scam Methods
Foreclosure rescue scams can involve a number of different methods to force or trick the property owner out of the home. These can involve:
Lease-Buyback agreements: Here, the investor takes control of the lease but promises the homeowner that they’ll be able to rent the property, with the payments going towards a buyback deal. What usually ends up happening is that the rent prices are so high that the original owner can’t regain control of the lease. Or, the investor may set the buyback price way too high for the original owner.
Equity stripping or equity skimming: Here, the investor gains title to the home and allows the old owner to live there (similar to lease-buyback arrangements). Over time, the investor may cash out the remaining equity in the home. They may also charge rent while the previous owner is not living there.
Negotiation fees: Here, a firm or an agent may offer to negotiate new loan terms with a lender. They will act as a middleman between the borrower who is in debt with the lender. In reality, the fees are often disproportionate to the services rendered; in some cases, the firm or agent may never actually contact the lender at all.
There may be various other versions of foreclosure rescue schemes, but most of them follow these types of formats.
How Can I Avoid Foreclosure Rescue Scams?
In most cases, foreclosure rescue scams can be avoided by working only with certified and licensed professionals. Also, you should never cooperate with any group or agent that requires payment of fees up front before providing any type of service. This type of fee collection is actually illegal under federal laws.
Foreclosure rescue scams can result in criminal penalties for the liable parties, and can also result in civil damages for the losses they have caused. Be sure to report any instances of foreclosure fraud or scam to the authorities.
Do I Need a Lawyer for Help with Foreclosure Rescue Scams?
Foreclosure rescue scam artists often operate in the "grey areas" of real estate laws. They may often use methods that seem legal, but in reality are mixed with fraudulent intent and misrepresentation. You may need to hire a real estate lawyer if you feel that you have been affected by a foreclosure scam. Your attorney can help you file a claim in court and can help ensure that your interests are protected.
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Last Modified: 10-28-2015 01:12 PM PDT
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