Foreclosure Rescue Scams - The Dirty Dozen - 12 common ScamsScam #12) Surplus Funds Rip-offYou may think that if your home is sold at auction, you have lost everything. Sometimes, though, the house sells for more than enough to pay off the loan, the taxes, and all overdue amounts, and there is money left over. This money is called "surplus funds." If there is any money left after the house sells at auction, who gets it? You do!!! Or at least, you are entitled to it. You have to claim it, though. No one is going to hunt you down and say, "Here's your money!" After your home sells, contact the county sheriff's office. They will tell you if there are any surplus funds. If so, they will tell you how to apply for claiming your money. It does cost about $100 to apply, but you do not need professional or legal representation. You can take care of it yourself. Most people not only are uninformed that there may be surplus funds, but also are unaware that they can apply for the surplus themselves. Scammers count on that and will offer to "represent" you in claiming your surplus. They will make it sound complex and burdensome, but it really is not. The scammer usually charges a flat fee or a percentage (up to 75%) of the surplus, whichever is larger. Sometimes they will give you a verbal quote for their fee, then have you sign a complex agreement with a much higher fee amount buried in a lot of legal language. They will use distraction tactics while you are signing so you won't notice that the fee in the contract is much higher than their verbal quote. That's why you should always ask to keep the paperwork and look over it for awhile before you sign. Some scammers will approach you before the sale and get you worried that you will owe for any shortage if the house doesn't sell for enough to settle your debt. Some will approach you after the sale, knowing that there is a surplus. They will lie and tell you that there is money still due. With either of these angles, they will offer you a Quit Claim Deed (which terminates all claim you have to the property) and say it is the only way to get out of paying. Others just go for out and out forgery. They fill out the application, sign your name to it, and collect the funds posing as you. Red Flags to look for:• Anyone who approaches you to "represent", "assist", or "help" you claim surplus funds for a fee • Anyone who contacts you after your house sells at auction to tell you that you still owe money. • Anyone who suggests that you sign a Quit Claim Deed after your house sells at auction. Things to keep in mind:• It never hurts to try to do things yourself. From loan modification to claiming surplus funds, you may be surprised at how efficiently you can achieve great progress on your own. If you get into it and find that you are not getting anywhere, then consider contacting a professional.• NEVER TAKE ONE PERSON'S WORD FOR HOW MUCH YOU OWE. THEY MAY BE LYING. – DOUBLE CHECK THEIR INFORMATION WITH YOUR LENDER, THE COURT, or THE SHERIFF'S OFFICE. OTHER SCAMS – Although the scope of this course is foreclosure, be on guard for scams involving home improvement contractors who finance their own work. Some are legit, some are con artists. Short sale scams are on the rise as well. Scammers collect their fee up front, then drop out of sight. Anyone who is in legitimate real estate sales knows and accepts that their fee will be paid at closing. Many scammers are now seeking out the elderly. The scammers fraudulently set up reverse mortgages, also known as reverse annuity mortgages. Even legitimate reverse mortgages are complex and costly. Make sure you have been fully informed of the pro's and con's before applying for a reverse mortgage.
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