Monday, July 13, 2015

More on foreclosure scams

The fraudulently recorded deeds mentioned in last week's post are the most common foreclosure scams I see in my daily practice.  There are others though.

1.  Scammers ask you to sign documents without reading them.  Last week we discussed fraudulent deeds, where the borrower signs a deed [sometimes believing he is only signing loan modification documents] giving away part or all of the property to a third party in bankruptcy.  Often the third party has no idea he has been deeded the property.  Never sign documents until you read and understand them.

2.  Scammers offer sale-and-leaseback.  Another deed scam is the borrower signing away all of the property to the "foreclosure rescuer", who then promises to pay off the mortgage and rent the property back to the borrower "until he can get back on his feet".  Often, the borrower is then surprised by monthly rent payments higher than the mortgage he couldn't afford, PLUS the mortgage is not paid off.  He then defaults on his rent payments and is evicted, sometimes before the foreclosure sale even happens.  Read all documents in advance, especially your "lease", to make sure you can afford the lease payments. Be sure the promise to pay off the mortgage is in writing, so you can enforce it later.

3.  Scammers want money up-front.  Paying a "foreclosure rescue" firm up-front to help you with your loan modification application.  Even some attorneys are doing this.  If you live in California, STOP!  Because of the number of consumer complaints, California has enacted laws to protect consumers facing foreclosure, including laws that prohibit foreclosure consultants from collecting money before services are performed.  Don't pay money up-front.

4.  Scammers tell you to cancel your trust deed.  This has been used on and off over the past few years.  A consumer has the right to rescind a credit transaction, sometimes as long as three years after the contract was signed.  Many borrowers are sending their lenders a "cancellation of trust deed" notice, thinking they are then no longer obligated to pay the money.  While this may be true, depending on several factors, they forget that to rescind the trust deed means they have to RETURN THE PROPERTY.  Pretty much 100% of people who do this, claim they can keep their home without paying for it.  Hint -- this isn't how it works.  Cancelling / rescinding your trust deed, even if you are within the time frame to do it, won't allow you to keep your home.

If you are in this situation, here's more information about popular scams --

How to recognize a foreclosure rescue SCAM

What to do to avoid becoming a victim

Next week, information on what you CAN do, if you're facing foreclosure.

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