The recent mortgage crisis has left the door open for fraudulent foreclosure “rescue” professionals who use half-truths and outright lies to sell services that promise relief and then fail to deliver. If you think you may be facing foreclosure or know someone who is, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to recognize a foreclosure rescue scam and what your options are to help you save your home.

If you’re looking for foreclosure prevention help, avoid any business that guarantees to stop the foreclosure process.

How The Scams Work

Foreclosure rescue firms use a variety of tactics to find homeowners in distress. They use simple and straightforward messages, such as “Stop Foreclosure Now!” or “We guarantee to stop your foreclosure.” Once they have your attention, they use a variety of tactics to get your money.

Red Flags

If you’re looking for foreclosure prevention help, avoid any business that:

• guarantees to stop the foreclosure process – no matter what your circumstances
• instructs you not to contact your lender, lawyer, or credit or housing counselor
• collects a fee before providing you with any services
• accepts payment only by cashier’s check or wire transfer
• encourages you 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
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
• offers to fill out paperwork for you
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately.

Phony Counseling or Phantom Help
The scam artist tells you that he can negotiate a deal with your lender to save your house if you pay a fee first. You may be told not to contact your lender, lawyer or credit counselor, and to let the “negotiator” handle the details. Once you pay the fee, the phony takes off with your money.

Bait and Switch

You think you’re signing documents for a new loan to make your existing mortgage current. This could be a trick: You could be signing documents that surrender the title of your house to a scam artist in exchange for a “rescue” loan.

Rent-to-Buy Scheme

You’re told to surrender the title as part of a deal that allows you to remain in your home as a renter, and buy it back during the next few years. You may be told that surrendering the title will permit a borrower with a better credit rating to secure new financing -- and prevent the loss of the home. But the terms of these deals are usually so burdensome that buying back your home becomes impossible. You lose your home and the fraudster walks off with all or most of your home's equity. Worse yet, when the new borrower defaults on the loan - you are evicted.

Bankruptcy Foreclosure

A smooth talker may promise to negotiate with your lender or to get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refi-
nancing your loan, though, this scam artist pockets the fee and files a bankruptcy case in your name -- sometimes without your knowledge.

Report Fraud

If you think you’ve been a victim of foreclosure fraud, contact:

• Federal Trade Commission
• Your state Attorney General
• Your local Better Business Bureau

Finding Legitimate Help

If you are having trouble paying your mortgage or you've already received a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule. Other foreclosure prevention options, including reinstatement and forebearance, are explained in "Mortgage Payments Killing You? Here's What to Do"

You also may contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure. HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. More information about HOPE NOW is at www.995hope.org.

(Source: Federal Trade Commission)