Avoid Foreclosure Scams & Schemes in 2021 — Quick Guide

Posted by on May 19, 2021 in Economy, Loans and Frugal Living with 0 Comments

If you’re a homeowner, our little guide will help you avoid the newest types of a foreclosure scam.

Foreclosure & Scam Exposure

According to the Debtstoppers, foreclosure scam has become extremely popular during the pandemic days. So, what is it all about?

Scammers advertise themselves as a “foreclosure rescue” service on TV, radio, Facebook, and so on. Or they can take a more active approach and dig through the news, searching for foreclosure notices.

When they get in contact with the victim, they follow two scenarios:

  1. Loan modification. They ask you to pay upfront a substantial sum promising to legally lower your mortgage by 20-30%. This never happens, of course.
  2. A helping hand. Fraudsters promise to pay for your mortgage, allowing you to rent the house until you can buy it back. In reality, you’ll be paying them monthly rent drawing your property into extra debt.

Scammers create new schemes, but they always promise one thing: save your house.

Avoiding Foreclosure Scams

Okay, let’s see how you can protect your home from these mortgage vultures.

1. Identify threat

As we’ve said, scammers give false promises of saving your house. Here are a few more signs to identify them:

  • They want you to sign the title to your home to them.
  • They ask you to put your signature on some dodgy documents.
  • They demand your and your family’s personal info.

Often, they don’t show up on your porch. Scammers prefer to work remotely these days. So, if you get a call from someone who offers “mortgage solution” but is not your mortgage servicer, it’s definitely a red flag.

2. Loan modification

As you already know, in this scheme, fraudsters promise to reduce the loan percentage of your mortgage. For that, they want a handsome financial reward.

In reality, you can get such a service plus counseling about your mortgage for free from the U.S. Department of Housing and Urban Development.

3. Disguise

Con artists are also picky when it comes to their disguise. If they choose to contact you,  they will use high-brow titles, names, and abbreviations to make the deal sound official. This is a classic trick to gain someone’s trust.

Often, they’ll inform you that they contact you at your servicer’s request. In reality, the mortgage servicer would contact you personally, without involving some 3d party agency. This is another red flag, and you should consult your servicer right away if that happens.

4. Bankruptcy

Scammers can try to persuade you that filing for bankruptcy is the only way out. And they’ll be glad to arrange the entire procedure for you, also “eliminating” your possible mortgage debt.

While bankruptcy does put an “automatic stay” on debt-collection, it is a temporary effect. Sooner or later, you’ll have to resume paying the mortgage, and your credit history will be soiled with a 10-year bankruptcy record.

P.S. Filing for bankruptcy is free. Learn more here.

5. Don’t buy into “debt elimination”

Another favorite scam tactic is to tell you about non-existent “secret” laws, according to which you can eliminate your mortgage debts fully.

In reality, it’s a bag of lies and illusions. Scammers will again ask you for a substantial fee, and you will never hear from them again.

If you really want to know more about mortgage laws, check this official page. And if you’ve been financially affected by the pandemic, you can claim some mortgage relief absolutely for free.

Down with the Scam

Follow our tips, check the government’s pages and never give your mortgage money to anyone except your servicer. This simple guide will fly to protect your family’s home.

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