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 Housing and Mortgage Crises Create New Targets for Scams
Economic troubles and current real estate conditions make for desperate times. In Kern County, these desperate times are often accompanied by faulty judgment and an increase in potential fraud victims. The real estate market and mortgage hardships in this region are burdensome enough. Don't let fraud make a dire situation worse.
Steps to take once your house is in foreclosure
If your house is currently in foreclosure, you may be targeted by unscrupulous businesses looking to take advantage of your vulnerable situation. Homeowners should be wary of any unsolicited visits by realty or property services. These visits can involve high-pressure sales pitches that can lead to the homeowner entering into disadvantageous or fraudulent contracts.
If your home is in foreclosure here are some steps to follow:
- Collect all pertinent financial information that may assist your mortgage company in making a decision. This includes a current credit report which you can obtain for free from these websites: www.equifax.com, www.transunion.com and www.experian.com
- Call the mortgage company and explain your problems. Ask if they will modify your current payment schedule or assist in the sale of your property.
- If your mortgage is an FHA loan, contact the local HUD agency. If it is a VA loan, contact the Veterans Association. If your loan has mortgage insurance, contact the policy carrier for assistance.
- Consider consulting a realtor to sell your home and your CPA or attorney for possible negative tax consequences of foreclosure.
- Research a company with the Better Business Bureau (www.bbb.org) before you enter into any transaction involving your home.
- Do not sign any contract that contains blank terms or terms you don't understand.
Look Out For Mortgage Rescue Businesses
Advertisements that claim to rescue consumers from financial problems are in abundance due to the region's much publicized real estate woes. The claims made by these businesses range from securing your home from foreclosure, to guaranteeing creditor settlements, and all things in between. The most common foreclosure scam usually involves the homeowner paying "rent" to a business. In return, the business will demand that the homeowner sign over the title of the home while the company pays off the homeowner's debts.
Are theses claims legitimate? Some may be, but you have to be aware of those that aren't. The worst case scenarios have the homeowner paying rent on their home while the business does nothing to repay the homeowner's creditors. The house stays in foreclosure, the house is sold, and the homeowner loses everything. A more recent variation of this scam has the business paying off the house and then offering the homeowner a lease with an option to buy. In these cases, an unscrupulous business will either set the rent too high for the homeowner to afford or the purchase price will be much more than the value of the property, making it impractical or impossible for the owner to re-purchase their home.
The most important thing a consumer must do is to research a business before entering into any type of agreement involving their home. Initially, the Better Business Bureau office (www.bbb.org) is a good place to begin research on a prospective company. If a company has a history of dealing with consumer complaints it can be found. The Department of Consumer Affairs (www.dca.ca.gov) and the State Attorney General's office (www.ag.ca.gov) also field consumer complaints and may have some additional information on a company's history.
The Internet can also provide a wealth of information concerning a prospective company. Searching the company name is a good start. With a thorough search, you may find the company's homepage which can provide useful information, such as contact information, office location, and public forums. You may also discover consumer testimonials from sources such as consumer protection websites or public message boards.
Before entering any financial rescue service agreement make an attempt to speak to your current financial institution for advice. There may be alternatives available. Also, a creditor can be negotiated with concerning debts. You should turn to a third-party source only when other options with your mortgage company have been completely exhausted.
Watch Out for Advanced-Fee Loan Scams
If a consumer feels like they have no other option, they may turn to the internet to seek an alternative source of financing. This method of seeking out loans may leave the consumer vulnerable to fraud. In an updated version of an old scam, businesses offering advance-fee loans have proliferated on the internet over the last few years.
The way an advanced-fee loan scam works is that the company will offer a loan or credit with a high likelihood of approval. In order to obtain this loan, the consumer must first pay an up-front fee of hundreds of dollars. This fee is often claimed to be used for "credit insurance" or processing fees. The company then requests that these fees are sent through Western Union or Moneygram or a similar courier service. The funds are usually sent to Canada or some other international address. After the initial fee is sent, the company will often follow up with a request for additional fees or claim that the original fee was never received. At this point, the consumer is milked for more money or wises up. Coming to the realization this is a scam won't help much. Since the money was sent through a wire service, there is little the consumer can do to take action against the recipient. As a result, the loan never arrives, the fees paid are lost, and the consumer is left in a worse financial position than when they began.
In order to avoid this type of scam, keep in mind any type of advance-fee in exchange for a loan is illegal in the United States. You should also walk away from any company requiring use of a wire service to transfer funds. Don't let legitimate looking documents cloud your judgment. Many of these businesses will fax you convincing looking paperwork to assure you they are legitimate. No matter how professional the paper work may appear, if they are asking for advance fees sent by wire services, it is still most likely a scam.
If you have been the victim of this type of fraud contact the Federal Trade Commission at 1-877 FTC-HELP or www.ftc.gov
You can visit Chain-Younger Websites for additional information regarding:
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