Foreclosure Scams
Facing the threat of losing a home, a home owner will
be plagued by individuals and companies offering to "help" the
person out of his or her difficult financial situation. In most
cases, these people are out for one thing--making money from someone's
problems. These scams will come in many shapes and
varieties...ranging from direct mail offering to "negotiate" on
behalf of the home owner for a nominal fee to people knocking on the door
offering to help out by reinstating the loan, taking title and leasing the
home back to the individual. People facing foreclosure are
vulnerable to con-artists and scams. However, using a little common
sense any home owner can avoid being taken advantage of and find a viable
and ethical solution for his or her dilemma.
In Arizona, a lender initiates the foreclosure
process by filing a Notice of Trustee Sale with the county recorder.
This notice is the equivalent of posting a large 50 foot neon sign above
someone's house saying, "Here I am, take advantage of me!"
because shrewd individuals and companies know that the home owner is in
trouble and will often times do anything to resolve the problem.
The following lists several ploys implemented by
these individuals:
Short Term Loans. People may approach
financially troubled home owners with the possibility of lending him or
her a short term loan, and in some cases offer a loan with no payments for
a certain period of time. These loans have high interest rates, require a
balloon payments (where the home owner must pay off the loan by a certain
date), or other features that may sound attractive. In reality, these
loans are additional liens against a home and if the home owner fails to
make a monthly payment or the balloon payment, the home owner could face
foreclosure again.
Unethical Realtors Trying to Take Your
Equity. Real estate agents
(many claiming to be "pre-foreclosure" specialists) offer reinstate a
person's loan and sell the house with the idea of salvaging any accrued
equity and appreciation in the home. The catch is that the home owner must
split the earnings with the agent instead of paying a commission. The
reality is that the home owner could have hired a competent agent and
accomplished the same end result with less money out of pocket.
Investors Trying to Take Your
Equity. Many Investors aka the I/We Buy Houses people
approach home owners facing foreclosure and try to take their home and
equity without offering any other assistance. An ethical person would
not simply just take your equity without trying to exhaust every effort to help
you save your home and equity. These unethical people have no
other answers for you other than taking your home and are just trying to
make money offer your problems.
Debt Negotiating/Counseling Agencies.
Many companies, reputable and not-so-reputable, offer to negotiate or
consolidate the debt for the home owner. The catch is that the home owner
must prepay for these services (many the home owner can do on his or her
own accord). These individuals do not offer anything that you cannot do on
your own or that other non-profit agencies will provide free of charge. If
you need a debt negotiating agency, contact your local Consumer Credit
Counselors.
“Financial Services” Companies. There
has been a proliferation of individuals, often posing as a financial
services company, that offer to assist home owners facing foreclosure with
everything from tax advising, debt management, real estate sales and
pre-foreclosure sales. The reality of these individuals is that they do
not run legitimate corporations (according the Arizona Corporations
Commission) and are not legally licensed as required by the Arizona State
Banking Department for debt or credit counseling. Be wary of anyone who
wears a thousand hats for any occasion or pay money for their services
upfront!
Visitors. Expect many people, including
investors and real estate agents, to visit your home. They will paper your
house with flyers, knock on your door at all hours, and stalk you and your
family until they have an opportunity to speak with you. The worse
perpetrators are individuals posing as government employees dispatched to
your home to assist you. The lender, the County, and the Federal
government will not send out personal representatives to assist you unless
you have initiated the call to the right agency.
Bankruptcy. No matter what an attorney
may tell you, bankruptcy does not stop foreclosure. It is true that
bankruptcy does suspend the foreclosure process. For more
information on foreclosure and bankruptcy, click
here.
There is free help and assistance for home owners
facing the possibility of foreclosure. If you would like to talk
with someone about your situation, click
here.
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