Beware of Potential Foreclosure Scams

Posted on: January 22, 2012


As the real estate market has struggled and more and more homeowners have needed help to keep their homes, criminals have stepped up their efforts to ensnare homeowners with scams. Some homeowners have lost all of their savings, and other homeowners have even lost their homes. Whether you’re a homeowner dealing with a potential foreclosure, or a new buyer looking to buy a foreclosed home or use alternative financing – make sure you’re dealing with legitimate individuals. Always try your bank first, and make sure anyone who gets your money is a real entity. Also, get contracts in writing.

Foreclosure Scam in California

A California-based real estate company was involved in scamming homeowners into paying loan-modification fees with a bogus loan modification scheme. The company promised homeowners that they could save their homes, lower mortgage payments and prevent foreclosures. In reality, the company simply took the money and many of the homeowners lost their homes anyway. It was a false company that never had the power to make a loan modification, or the intention of helping any of these homeowners.

When you’re considering any sort of irregular financing options to save your home or buy a new home, make sure you’re dealing with a legitimate source. Ads saying things like “We will save your home, guaranteed!” or “Guaranteed new lower mortgage payments!” typically aren’t able to deliver what they offer. In reality, loan modification is something you must qualify for based on income and expenses, and no-one can “guarantee” it. As a new buyer, buying a foreclosure or short sale can be risky if you’re not dealing with a legitimate source, as can using an alternative financing option.

Bottom line: make sure you have a contract if you’re using any sort of irregular option to save your home or buy a new home. If you already own a home, check with your lender to determine whether the opportunity is legitimate. If you’re buying a home, consult a knowledgeable, reputable real estate agent, lender or lawyer to determine whether an opportunity is real. The old adage applies to home ownership: “If it sounds too good to be true, it probably is!”


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