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Foreclosure rescue scams

Foreclosure rescue scams are multiplying in the wake of the nationwide sub-prime lending crisis that has caused lenders to repossess hundreds of thousands of homes. Many victims never report these scams, and even when they do, prosecution is difficult, so no concrete statistics exist, but consumer advocates and law enforcement experts say the scams are increasingly common.

Because lenders must file public notices of mortgage defaults, it's easy to find people who are on the brink of losing their homes. Con artists promise the homeowner that a network of investors would save their house from foreclosure by taking over ownership then renting it to them, promising that they could buy it back. Sure, the plan involves deeding the home to someone else. The promised advantages were appealing: cash back from the sale, lower monthly housing costs, assistance in improving the credit score and the chance to make money referring other people for similar lease-back plans. And you can buy back your home after 2-3 years when you can afford it again.

Con artists make money by getting title to the houses and stripping out equity by getting cash back at closing or by refinancing. Even if a house has no equity, if scammers get an artificially high appraisal, they can take out cash from the sale. Often, the victims are told that they can continue living in the home for minimal rent. The cons might make mortgage payments for few months, or they might not make any. Eventually, the house goes into foreclosure, the new deed holder walks away, and the former homeowner is evicted.

If you fear a foreclosure, don't talk to someone who comes to your door and offers a solution too good to be true, or who is advertising the service on little light pole signs in your ares. Always seek professional help. Read what you sign and use your common sense. Don't respond to the "we buy homes" ads. Talk to your Realtor if you need to sell your home. Your mortgage broker can be a good source for mortgage related information.


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