Foreclosure Rescue Scams Exposed

The Dirty Dozen –#4 of the 12 Most Common Foreclosure Scams

Foreclosure Rescue Scam #4)... The Lease-Back or Buy-Back

These scammers will use terms like:

• Bail-Out,

• Rent-To-Buy, or

• Repurchase

They offer to pay off your mortgage or bring it current, but in return they ask you to "temporarily" sign over your deed to them. They reassure you that you will stay on as a renter. They make it sound like their ownership of your home is all just a formality "on paper". They say the plan is for you to repair your credit while you rent your house from them. They may even offer to repair your credit – for a fee. Then, they promise to sell the house back to you when your credit is solid enough for you to qualify for a good loan.

They will suggest shady sounding methods and confusing plans. For instance,

• The foreclosure rescue scammer will say you must sign over your deed so they can "shelter" the home under someone else's good credit.

• Sometimes they tell you that they will shelter the deed in a "land trust". They will even call the trust by your family name. All of that sounds ok, but it still takes the deed out of your hands.

• They may tell you that your name will still be on the deed, but they are going to add another person's name to the deed so you can refinance using that person's good credit.

• They may (or may not) tell you that the "other person" named on your deed does not know that their name and credit is being used.

• They offer to buy your home to "save you" from foreclosure and sell it back to you later

• They offer to bring your mortgage current for you (or even pay it off completely), then once your credit is fixed they promise to get you refinanced with enough cash left over to pay them back for the help they are offering.

Several of the above practices are considered "deceptive" by the government. If you knowingly take part in these activities, you are in danger of committing mortgage fraud yourself, which is a federal offense.

These deals appear to offer hope to homeowners who are near desperation. The scammer may not even disclose that the homeowner is actually selling the house or signing it over to the scammer. Homeowners believe they are being given one last chance to save their home.

In any scam, not just this one, a scammer will often make it sound as if it is "you and him" against the bank. He will make his case as though the bank has stuck it to you and now it is your turn to stick it to the bank. He will even try to keep the bank in the dark about what is going on.

He actually knows that, if the bank were informed, they may warn you that you are being conned. That is why he wants to keep his dealings with you a secret. Plus, if he has disclosed that his methods are shady, he will use fear of being caught as a reason to keep others in the dark about what you are doing. But remember, if he will "stick it to the bank", he will not have a problem "sticking it to you" either. Read on about how he plans to do just that.

Once the transaction closes, and the homeowner becomes the renter, the danger of losing the home is even greater:

1) The foreclosure rescue scammer can set up impossible conditions by putting a time-limit on the buy-back option or by setting the buy-back price exorbitantly high.

2) Now that the scammer owns the home, he can raise your rent so high that you can no longer afford it. Then, he is legally allowed to evict you.

3) The scammer can sell or rent the house to someone else.

4) The scammer sometimes promises to pay your mortgage payments for you, but he may never do it, or he may stop without notice.

5) There is a twist on the scheme where the scammer arranges for a third party (or maybe himself) to "assume" your loan. He arranges for you to pay your payments to him or to the third party as rent and use your "rent" payments to pay the mortgage. Instead the scammer pockets the "rent" and defaults on the loan. If that happens, you are back on the hook for the payments.

6) Sometimes, they will make it sound as if you need to move out "temporarily" so that the bank thinks you have abandoned the property. They promise to swoop in and buy your house from the bank, then you can move back in and rent it with the plan to buy it back later. In the meantime, the scammer rents or sells your home to someone else.

The end result in each of the above scenarios is that you lose your home and any equity that you may have built. You also have a foreclosure on your record to boot. Even worse, if in your desperation, you engaged in deceptive practices, you may have unwittingly been a party to mortgage fraud.

Red Flags to look for:

• Terms like "Buy-back" or "Bail-out"

• Making it seem that "your only chance" to save your home is by doing something shady

• If the "specialist" says things like, "no one has to know" or "we will stick it to the bank", or "it's done all the time"

• If anyone tries to get you to move out "temporarily"

• If anyone tries to get you to sign over the deed to your house

• Anyone arranging for you to pay mortgage or rent payments directly to them or their "company"

Things to keep in mind:

• NEVER LET ANYONE LEAD YOU INTO SOMETHING THAT YOU KNOW IS UNDERHANDED

• If he will stick it to the bank, he will stick it to you.

• NEVER ABANDON YOUR PROPERTY

• NEVER SIGN OVER OWNERSHIP RIGHTS TO YOUR PROPERTY

• ANY MONEY YOU PAY SHOULD GO DIRECTLY FROM YOU TO YOUR LENDER

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