The Top 3 Foreclosure Rescue Scams and How to Spot Them

The Top 3 Foreclosure Rescue Scams and How to Spot Them

It's terrifying to realize how many homes are being stolen right out from underneath their owners under the guise of saving them from foreclosure. Officials are receiving more calls from foreclosure scam victims in a week than they received previously in a month.

Mortgage fraud rates have doubled in the last year according to FBI reports and the numbers are only expected to increase with the rising rate of foreclosures across the country.

There are many types of scams and quite a few variations of them. The National Consumer Law Center has identified the top three most popular and dangerous scams to be

1. Fake Help: The scam artist poses as a professional who has dealt with cases similar to yours and will offer you proof of his successful track record. He'll offer to help you out in the foreclosure process and stop it entirely by utilizing his knowledge and the special resources available to him. His services will typically come at a hefty price tag that you'll have to pay up front.

Scammers have charged and collected up to $1300 from homeowners desperate to stop their foreclosure. Usually the services the scam artist promises to handle are things you could have easily done yourself. You've been hoodwinked out of money that you could have used to get legitimate help from a lawyer and your house is likely to be too far along in the foreclosure process to save it, by the time you realize that you've been conned.

2. Bait-and-Switch scam: It might be possible to save your home if you could just refinance your mortgage and if you fit this particular profile, you might be at risk of being the victim of a 'bait and switch' scam.

You may think that you're applying for a new loan but in actuality the scammer has sneaked in papers or has introduced legal language that surrenders your home to him. As reprehensible as it sounds, you can actually sign away ownership of your house without your knowledge, in exchange for a 'rescue' loan.

3. Rent-to-Buy Scam: You're presented with a very sensible deal that allows you to stay in your home as a renter for a specified lease period. You are asked to sell your home to the scammer, which will allow him save your home by securing new financing with his good credit rating.

You agree to this scam and sell your home for a cheap price. The catch is though that the deal is structured in such a way that you possibly can't win. You wont be able to buy back your house and the scammer might have you evicted or might default on the new loan and the house goes into foreclosure again.

Instead of saving you from foreclosure, these scams make it inevitable. Thousands of homeowners have had their lives shattered as a result of falling victim to these 'stop foreclosure' scams.