A foreclosure scam is designed to prey on the vulnerability of your situation and to offer up a quicker and easier way to get out of your current situation. Trust your instincts - if it seems too easy, then there is probably a good reason why. Here are some scams to look out for:
Foreclosure Assistance
Once you find yourself in foreclosure, you may be approached by various people offering assistance in dealing with your lender, filling out all the paperwork, and making the necessary phone calls. While this may sound like much needed relief from overwhelming tasks, you will end up forking over a large sum of money for things you can easily do yourself. Don't let yourself get overwhelmed by things that are simply a part of the process.
Transferring Ownership
There are several scams that require you to sign paperwork you don't understand or to sign over the ownership of your home. Never sign anything unless you fully understand what the consequences will be.
When a person offering to rescue you from foreclosure asks you to sign papers that they claim will make your mortgage current, it should raise a red flag. Often, these papers are part of a bait and switch scam. The papers you are asked to sign actually give ownership to the other person. Not only will you get evicted, but in this case, you can still be stuck with the mortgage because the mortgage itself is still in your name.
In a similar scam, the person offering to bail you out will ask you to sign over ownership to him or her while offering you the opportunity to stay in the house and buy it back over time. However, the terms for buying back the house are intentionally made impossible so the person conducting the scam gets all the equity.
Educate Yourself About Foreclosure
As soon as foreclosure becomes an issue for you, the best thing you can do is educate yourself. Don't be afraid to talk to your lender to find out what your options, and more importantly, what your rights are.
Depending on your specific foreclosure situation, you may be able to refinance your loan or renegotiate your current repayment schedule with your lender. If you don't have too much equity in your home yet, there is also the deed in lieu of foreclosure option where you give the house back to the lender in exchange for being released from your mortgage. Other options include selling the house, if possible, or filing for bankruptcy. Knowing what your options are and which one works best for you will allow you to avoid a foreclosure scam.