Easy does it . . . there are a lot of foreclosure scams out there. AND, there are also a lot of legitimate companies as well who can help you stop foreclosure. Following are six things that can help you tell the honest companies from the con-artists, and avoid foreclosure scams. The information you are about to read runs COMPLETELY counter to everything the banks and their government cronies are telling you about how to save your home - but it's VITAL to saving your home. If you simply follow the conventional "how to avoid scams" advice from the corporate media, your lender/servicer, and the thousands of bank-funded "nonprofits" and "loan modification shops" with ulterior motives, then you're making a FATAL mistake and you could quickly find yourself in a world of hurt.
Anti-Scam Tip #1: DON'T Work with Nonprofits
Ask anyone these days how you can avoid getting scammed by phony "foreclosure relief" companies, and you'll probably hear them say "work with non-profits, HUD counselors, and so on". This is actually some of the WORST advice you could ever get. Now that doesn't mean that every company that charges a fee is good - many of those can be scams as well. But if you work with a non-profit group, you will quickly discover that they have NO INTEREST in doing anything that gets results for you. And this is for three reasons:
1. Non-profit agencies are staffed by volunteers and minimum wage workers - NOT foreclosure prevention professionals. They don't know any more than you do about fighting foreclosure and saving your home, and most barely have a high school education. All they are trained to do is fax in paperwork that the bank will throw away anyway. Do you really want to literally bet the house on them?
You need seasoned professional lawyers to negotiate with the bank, NOT minimum-wage pencil-pushers. Otherwise you have no investigations and no EVIDENCE against the bank to negotiate with. How do nonprofit employees expect to get anything done for you when they have no evidence of fraud and no legal standing to make the banks do anything? The government programs they pitch are BROKEN and don't require the banks to do anything, they can deny you on a whim without even giving a reason why. HUD is not some kind of magic bullet, and being HUD-approved doesn't mean a company is trustworthy. Quite the opposite- remember, HUD and FHA are huge bureaucracies run by bank lobbyists, for the benefit of the banks. They, along with Fannie Mae and Freddie Mac, were the ones that pumped trillions in cheap sub-prime credit into mortgage banks and created the mortgage bubble that wrecked the housing market in the first place. HUD is not on your side!
Anti-Scam Tip #2: Avoid Loan Modification Services like the plague - EVEN if they are free
There is a huge amount of ignorance and bad advice being spread on the internet about loan modifications. The banks and their HUD-approved counseling partners are basically claiming that the only option (short of bankruptcy or selling your house) is applying for a loan modification through either a government program like HAMP or an in-house bank loan mod program - both of which are equally ineffective and toothless. Essentially, they want you to beg for your home rather than know your rights to DEMAND it.
In the end loan mods not only fail to provide any legal defense for your rights as a homeowner - they ACTUALLY strip you of any rights to your home and turn you into a renter, after which point the bank usually uses renter's laws to evict you from the property - and then you are an open target for them to seize your assets to cover the unpaid deficiency on the loan once they sell the house at rock-bottom prices. You may be wondering, how can this happen? It is theft, pure and simple. And loan modifications, far from being a remedy to foreclosure, actually exacerbate the process and make it far more devastating to the homeowner. Meanwhile those apathetic minimum-wage workers at the HUD-approved nonprofit are being subsidized by the banks, and don't make enough to care where their next paycheck is coming from, let alone care what happens to your property after they submit your loan mod application. So as you can see, loan modification services are a TRAP and a SCAM, even when you don't have to pay for them out of pocket. You WILL ultimately end up paying dearly for such incompetent "free" services - with your home, your credit, and possibly your entire life savings.
Anti-Scam Tip #3: Expect to pay SOME upfront cost if you expect ANYTHING to be done
Many bank and government-funded "scam alert" sites out there will tell you to beware of any company that asks for an up-front fee to do loan modifications. By now it's a well-known fact that this is a HUGE red flag. But that doesn't mean that you should expect real help for free. Nonprofit counselors and other free services have no legal representation and therefore no power to make the banks do anything to help you. Paying for legal muscle to stop your foreclosure is going to be necessary in most cases. The thing you have to pay attention to is WHAT you are paying for.
Yes, it IS illegal to charge upfront for one type of service - that's loan modifications. But what the banks and even most government sites will NEVER tell you is that loan modifications are non-binding and useless even if you get them done for free - the bank can always choose to reject your application at will even if you qualify. They never tell you that there are PLENTY of other avenues for stopping foreclosure that work far better than a loan modification - these alternatives to a loan modification are far more effective and perfectly legal, but unlike loan mods, they can only be performed by experienced professionals, and therefore are NOT free. For example, a tier-III securitization audit of your loan can mean the difference between keeping and losing your home, but it HAS to be done by experienced Bloomberg-certified securities auditors and handled by an actual LAW FIRM with attorneys specializing in not just real estate law, but also banking law and securities law, and up to date with the latest regulations in all three areas. As you might guess, such firms are not very common (your local property or bankruptcy attorney literally has NO CLUE how to handle today's post-housing bubble foreclosure cases). Ever since 2001, the vast majority of mortgages have NOT been traditional hard-money loans. They have been securitized, converted into bonds and sold on wall street to private investors - in the process a huge amount of fraud was committed - destroyed notes, broken chain of assignments, sales of the mortgage debt instrument between investors not documented at all, forged documents, robo-signers, negligent misrepresentation, multiple MERS violations, the list goes on and on....
Any of these problems could be affecting your loan, and in most cases they render any foreclosure ILLEGAL because the paperwork is so predatory and flawed that the bank literally can not even prove that they own your loan. They have already sold it to private investors and gotten their money back - so it is likely they have no claim on you home. However the only way to save your home is to prove any of this. And to prove it you NEED a top-tier law firm handling your case. Attorneys do charge fees, as do auditors. It's not a scam, it's a fact of life. Nobody will work on your case for free, unless they are already being funded by the banks. And you don't want those kinds of two-faced turncoats "helping" you out.
That said, there ARE plenty of scammers out there who also charge upfront fees. When you do pay someone, know exactly what you’re getting for your money. Don't pay attorneys to file a lawsuit unless you have already paid for a securitization audit and it returned conclusive proof of fraud. Without a successful audit, the evidence is unknown and you don't have a case, and filing a lawsuit without evidence is a total waste of time and money regardless of how skilled your attorney is.
And in case you're still wondering.... NO, attorneys do not take on individual foreclosure cases for free. At least not if they're real attorneys with a bar certification and an actual law degree.
Anti-Scam Tip #4: Know What You’re Signing!
Many foreclosure scam artists get unwitting homeowners to sign over the deed to their properties. They also get them to sign powers of attorney unknowingly. This powerful document allows them to conduct financial business in your name. Of course, the banks have already been gambling with your home and your credit in a very similar way. It’s incredibly easy to get scammed into sign over the deed to your house or sign a power of attorney. Why/how? As every homeowner knows, you sign a lot of papers when you decide to buy, sell, refinance or "modify" a mortgage. Hence, one of these documents could easily “slip by you.”
So, pay attention to every document you sign. DO NOT sign over the deed to your house if you intend on keeping it. And if you do want to walk away from your home, don't sign any grant deed contract unless it explicitly states in writing that the company offering the contract is BOUND to litigate on your behalf to stop all deficiency judgments against you on the mortgage. Make sure the people you are working with are exactly what they say they are. For example, don't assume that you are working with an attorney unless he shows you proof that he is indeed an attorney. NEVER hire anyone who claims to be an attorney until you have ordered a professional audit on your loan. And, if you don’t understand something, don’t sign it. Period.
Anti-Scam Tip #5: A specific outcome is NEVER guaranteed
If a company unconditionally guarantees that they can get you a certain result (e.g., lower your payment by 50%, get your loan modified, etc.), then run for the hills! When it comes to fixing a broken mortgage, you can NEVER guarantee anything without qualification or conditions - it's ILLEGAL.
Nobody can guarantee a principal reduction, a lower interest rate, or reduction of late fees and arrears in every case. Foreclosures can only be handled on a case-by-case basis. Ultimately whether your foreclosure can be stopped let alone reversed depends on the strength of the evidence found in a comprehensive tier-III audit on your mortgage, as well as the laws of your state. While working with a foreclosure prevention law firm can increase your chances of obtaining a desired result, every reputable attorney and legal counselor will tell you that they can’t guarantee a certain outcome. The ONLY guarantee they can legally make is a refund on the audit on the condition that it comes back clean and you don't have a case against your lender. However even that is strictly conditional. Finding fraud on the audit per se can never be unconditionally guaranteed, since it's an investigation with many possible outcomes.
Anti-Scam Tip #6: Use Common Sense & Trust Your Gut
If something just doesn’t “feel right in the pit of your stomach,” trust that. If it sounds too good to be true, it most likely is (even if it's free). And, no matter how desperate you may be to stop foreclosure, by going against your instincts, you could be getting yourself into even more financial hot water.
Warning Signs
If you're looking for help to save your home, avoid any business that:- guarantees to stop the foreclosure process no matter who your lender is or what your circumstances are;
- only sells you loan modifications or other unproven products like REST reports or Forensic audits;
- tells you not to contact your lender, lawyer, or financial legal counselor;
- claims that most or all of its customers get their loans written off or their homes free and clear
- charges upfront for foreclosure prevention seminars "guaranteeing" that you will be able to stop your foreclosure yourself with what you learn in their seminar
- asks for an upfront fee before even asking about your hardship or giving you a consultation (unless it's a lawyer you've checked out thoroughly);
- accepts payment only by credit card or moneygram/wire transfer;
- offers no option other than to lease your home so you can buy it back over time;
- tells you to make your mortgage payments directly to it, rather than your lender;
- tells you to transfer your property deed or title to it in order to keep your home;
- offers to buy your house for cash for much lower than the selling price of similar houses in your neighborhood (i.e. "cash for keys"); or
- pressures you to sign papers you haven't had a chance to read thoroughly or that you don't understand.
If you suspect you are being scammed by either your lender or a loan modification company, or your attorney is not honoring their end of the retainer agreement you signed, please call our offices at (855)529-5559 to find out your rights and whether you have legal recourse to stop your foreclosure without paying the scammers any more money. Also, report offenders to Ripoff Report, the FTC, and the American Bar Association.
Good luck in not becoming a victim of a foreclosure scam.
Lynn Symoniak
As Florida’s foreclosure crisis continues, Manatee County Clerk of the
Circuit Court & Comptroller, R.B. “Chips” Shore, suggests that
property owners conduct regular and routine public records searches for
faulty liens and other documents that may be filed against their
property. As the foreclosure process and “foreclosure mills” came under
scrutiny for inaccurate documentation and other issues, the need to show
clear and accurate title to one’s property came to the forefront.
