Legal Issues with Foreclosure Consultants

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 What Are Foreclosure Consultants?

Many people are turning to foreclosure consultants for help and guidance as a result of the recent financial crisis and real estate catastrophe. These people are real estate experts who focus on the foreclosure process. They occasionally work alone but are typically associated with a real estate business like a brokerage or mortgage company.

A person facing foreclosure may work with or hire foreclosure advisors to handle a number of duties. They could, for instance, be able to:

  • Help in acquiring a new loan or funding deal
  • Assist in obtaining a waiver of different mortgage provisions
  • Give suggestions for preventing foreclosure
  • Take steps to reduce your monthly mortgage payments or apply for a forbearance.

Therefore, those who are facing foreclosure on their house or residential property may find it advantageous to seek the guidance of a foreclosure specialist.

Which Legal Problems Affect Foreclosure Consultants the Most Frequently?

Although working with a foreclosure consultant has its benefits, customers should use caution. This is due to the fact that a phony consultant may commit fraud involving foreclosures and other forms of fraud in the absence of licensing regulations. There have been numerous instances where foreclosure counselors have taken advantage of clients with difficult financial difficulties.

When working with a foreclosure counselor, you should be cautious of the following legal issues:

  • Fee disagreements/disputes: Steer clear of “professionals” who demand exorbitant or unjustifiable fees for their services.
  • The frequency of fraud: Be wary of claims and incentives that seem “too good to be true.”
  • Dealings with third parties without authorization: Your consultant should be transparent about all parties they are working with and their connection to you.
  • Using or abusing your financial and personal information: NEVER give personal information to businesses or consultants whose activities seem shady, unlawful, or dubious.
  • Breaking the law: Avoid making any commitments or taking any acts that might go against local, state, or federal laws.

When working with a foreclosure consultant, you should verify their license credentials to ensure they have registered with the relevant authorities to protect yourself. Keep copies of all contracts, paperwork, and other agreements you have signed with these people. Last but not least, make sure to keep a record of the references’ contact details.

What Is Fraudulent Foreclosure?

When a homeowner is unable to make their regular mortgage payments, the mortgage lender forecloses on their home and evicts them from it. A contract stating as much was signed by the home’s buyer, giving a mortgage lender the ability to act in this manner. The contract usually states that the residence is used as collateral.

Although it often only lasts for a few months before the home is foreclosed upon, some lenders let payments be made during a grace period before the start of the foreclosure process.

Homeowners can be defrauded in a number of ways when facing foreclosure. Increases in foreclosures brought on by challenging economic conditions give thieves another chance to profit quickly off of helpless homeowners who are desperate to keep their homes. Predators will aggressively seek out foreclosure homeowners and try to entice them with claims that they may escape their debt, especially when a housing bubble breaks. A particularly heinous instance of white-collar crime is foreclosure fraud.

You must be on the lookout for anyone trying to offer you a solution that would give them control over the ownership of your home and/or your mortgage obligation if your house is in danger of going into foreclosure.

Additionally, you must sign written agreements concerning the house with considerable caution. Legal ramifications may result for you if it becomes clear that you were aware of the fraudulent activities.

What Are a Few Typical Foreclosure Fraud Techniques?

The most frequent form of foreclosure fraud is a con artist who, in exchange for a fee, promises to stop a foreclosure while keeping the money for themselves. When a con artist guarantees to pay off the mortgage while enabling the homeowner to continue living there as a renter, that is another instance of foreclosure fraud. They give the tenant a choice to later buy the house back.

But as a condition of the agreement, the homeowner must deed the property to a new borrower who is “investing” in it. This “investor” is actually a con artist who steals the equity from the house before both parties vanish. The homeowner will eventually be evicted because they are now only renting the property.

There are other additional ways to swindle homes facing foreclosure, but this one is the most popular.

Additional illustrations of the most typical foreclosure fraud techniques are provided below:

  • Payoffs in the Dark: A fresh mortgage repayment strategy is presented to homeowners in foreclosure. They propose to restructure the homeowner’s mortgage so that the new payments are more manageable. Even if the homeowner thinks they are making less monthly mortgage payments, they are really merely covering the interest on the loan.
    • The homeowner is now liable for making a lump-sum payment for the remaining principal of the loan after having completed the plan but simply paying the interest on their mortgage each month. This is known as the “balloon payment,” and it’s extremely likely that the homeowner is unable to make it. They are once more exposed to foreclosure actions. The written financing agreement may contain language referring to various kinds of funding plans;
  • Getting a Deed by Making False Claims: This plan is comparable to a previously mentioned scenario. Someone poses as a lender of money while actually preying on foreclosed homes. In order to help them escape foreclosure, they offer to help them refinance, but they insist that the homeowner give them the deed before they can assist. Once the fake lender obtains the deed, they vanish and give the homeowner no support; the “lender” then has possession of the house and is free to do anything they want with it. This can entail evicting the previous owner;
  • Forged or Modified Documents: A foreclosure predator could just sign documents in the homeowner’s name rather than convincing the homeowner to sign the house over to them. As an alternative, they might get a homeowner to sign the papers before changing them to fit their plans, false counseling services, etc.
    • When a homeowner is facing foreclosure, a person or group of persons may represent themselves as mortgage counselors or advisors and request payment for their services. The homeowner might not be aware that they are paying for information that is available elsewhere for free.

How Can I Defend Myself Against Foreclosure Fraud?

Open communication with your lender at the first hint of trouble is the first step in safeguarding yourself from foreclosure fraud. Your lender might be able to come to an agreement with you or connect you to reliable options. Be cautious if you are in foreclosure. A deal is most likely a scam if it sounds too good to be true.

If I Have Legal Issues with a Foreclosure Consultant, Do I Need a Lawyer?

Although they can provide useful services, you should exercise caution when working with foreclosure experts. You might want to speak with a foreclosure attorney for help and direction if you have any concerns or legal challenges with a foreclosure consultant.

If required, your attorney can bring a lawsuit on your behalf and work to safeguard your interests from fraud and other wrongdoings.

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