Tips to avoid foreclosure scams
You are already in deep financial trouble, if you are facing foreclosure threat. Getting into a scammer’s trap can be doubly damaging in these unfortunate circumstances. You must be aware that there is no dearth of people who may try to take advantage of your situation while proposing to help you in various ways. If you are exploring options to avoid foreclosure, here are few important tips on how to avoid foreclosure scams:
1. Avoid phoney counselling agencies: Work only with a non-profit agencies approved by HUD
Looking out for options to help you stop foreclosure? You may be approached by some fake groups either through email, phone or in person offering to perform some services for a fee. The best way to avoid this scam is to approach a counseling agency that is approved by Department of Housing and Urban Development (HUD). Please remember that HUD-approved housing counselors either offer counseling services at no cost or at a very low fees to provide their services. Be wary of agencies who demands a fee prior to offering any service. If you want to have the list of such approved agencies handy, you can visit HUD’s website for more information.
2. Don’t get in the trap of equity skimming: Avoid bogus buyers or helpers
Be aware of an unknown person or a group who offers to take you out of this financial crunch by proposing to buy your house or property. They may promise you to pay off your mortgage debts and in turn may suggest that you transfer the title of the property to them as a security to this payment. Also known as foreclosure rescue scheme or equity stripping, this is a very common real estate fraud during a mortgage crisis. What usually happens here is that this so-called investor gains the title and take out all the equity in the property while leasing the home to you. You have to remember that “signing over your deed to someone else does not necessarily relieve you of your obligation on your loan”.
3. Beware of signing any papers that are not clear to you
You don’t have to let a counselor to rush into things and force you to sign any papers whatsoever either without reading or comprehending them fully. Never sign a blank form and neither ask your counselor to fill out any forms for you. You have to take into confidence a known, reputable real-estate attorney before signing any important deal, for example, when you are transferring the title of your home to another party. Again to reiterate, “Signing over your deed to someone else does not necessarily relieve you of your obligation on your loan”. Especially be careful of signing any contract for a loan or a sale deal which is not formally releasing you from the liability for your mortgage loan.
4. Remember there are no guarantees: Ensure that you get all promises in writing
An experience, trustworthy counselor will not promise you anything concrete. The purpose of getting the services of a reliable counsellor is to increase the chances of keeping your home and avoid foreclosure by exploring all the possible options, understanding your eligibility for these options and ensuring that you are not falling for a scam. It is important that you get the details of any deal and promises, if any, in writing before making a further decision.
5. Pursuing short sale? Check out the history of your prospective buyer.
If a pre-foreclosure or a short sale seems to be the only viable option to avoid foreclosure, it is important that you check the background of the buyer for any complaints or frauds marked against him.