Fred Mac Avoid Foreclosure Rescue Schemes

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Foreclosure Rescue Scheme

A foreclosure rescue scheme is a type of fraud that takes advantage of homeowners who have fallen behind on their mortgage payments. The fraud perpetrator approaches the homeowner with promises of paying off the delinquent mortgage and helping the homeowner stay in the property.

These scams usually involve heavily marketed “deals” that are designed to save the homes of individuals who are behind in their mortgage payments or are already in foreclosure. According to the Dreams Foreclosed Report issued by the National Consumer Law Center, these “deals” may come in several scenarios.


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Phantom Help – the “rescuer” charges high fees for work the homeowner could do themselves or charges for promised representation that never materializes

Bailout – includes various schemes where homeowners surrender title to their houses thinking they will be able to remain as renters and buy the house back

Bait and Switch – homeowners think they are signing documents for a new loan to make the mortgage current, but sign away the home and are left holding the mortgage on a home they no longer own

Equity Stripping – a buyer purchases the home for the amount of the past due payments and flips the home for a quick profit


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Homeowner is solicited by “rescuer” with promise of short-term “private investor” financing to pay off a delinquent loan

Get to stay in home and rent back from “investor”

Convinced by “investor/rescuer” to convey title to “investor/rescuer” as collateral


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Foreclosure Rescue Scheme Scam Letter Example


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Protect Yourself from Scams

Don’t panic

Talk to your lender

Find out the foreclosure rules in your state – how much time do you have

Do not sign any documents you don’t understand or that have blank lines or spaces. If you're not sure, don't sign

Never sign a contract under pressure

Never sign away ownership of your property


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Protect Yourself from Scams

Don’t make payments to anyone other than your lender

Beware of a home-sale contract where you aren’t formally released from your mortgage

If you don’t speak English, make sure to use your own translator

Beware of those offering to pay your past due payments and take the house off of your hands (equity stripping)


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Resources

Federal Trade Commissionwww.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

Comptroller of the Currency:www.occ.treas.gov/ftp/ADVISORY/2008-1.html

Contact your state's attorney general office

– Locate your state attorney general through the Consumer Fraud Reporting Web site available atwww.ConsumerFraudReporting.org/StateAttorneyGeneralList.php

Fred Mac Avoid Foreclosure Rescue Schemes

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