Foreclosure Rescue Scams

Scam #9 of 12 - The Dirty Dozen - Foreclosure Scam Tricks

Foreclosure Rescue Scam #9) Loan Modification Scam

Beware of the up-front fee!!! Even asking for partial payment of the fee up-front is inappropriate. The goal here is not complicated.

The foreclosure scammer just wants to get as much as he can in fees before he disappears.

He will do some busy work and have you sign a lot of papers. But he is actually not working on getting your loan re-worked. Once he gets your personal information from the papers you filled out for him, he gets to work, but not in the way you think. He is not negotiating new terms for your loan; he is actually filing for bankruptcy on your behalf.

With this foreclosure scam, one of the papers he slips in on you is a blank bankruptcy petition. He will have you sign it while the blanks are still not filled in, then get all the other info he needs to complete the petition. How? He uses the other paperwork you filled out. It contains your account numbers, social security numbers, place of employment, income, etc.

He will tell you that the petition for bankruptcy is a last resort and that is why it is blank. He promises to use it only if all other efforts fail. Then he might say, "Even if you do get to that point, bankruptcy is not that big of a deal. It just gives you a strike on your credit, but allows you to walk away from all your bills. It's perfectly legal. Businesses do it all the time."

That is a gross misstatement of fact. Filing for bankruptcy will not stop foreclosure, but only postpone it. Bankruptcy is not a "strike," it is a devastating blow to your credit and to your way of life. It stays on your credit report for ten years. It will make it near impossible to finance anything for the next ten year: cars, homes, furniture, emergency expenses. Prospective landlords may not want to rent to you, employers may not want to hire or promote you.

In most instances, the foreclosure rescue scammer files for bankruptcy without your knowledge. The court issues a "stay order" once bankruptcy is filed which stops collection letters and calls. Because you are unaware that bankruptcy has been filed, you mistakenly conclude that the modification must be going through because you are not getting collection calls and notices anymore.

You will receive notice of court action by mail, but the con man will tell you that your mortgage problems have been resolved, so just ignore any letter you may receive from the court. He promises to appear in court on your behalf if necessary. Of course, he doesn't appear in court, but he is saying everything you want to hear. You believe him.

He may even say that since he is now representing you, that you should send him your mortgage payments and he will forward them to the lender. But you know better than this. We discussed this tactic in the Lease-Back scam (#4). All mortgage payments go directly from you to your lender

When you realize that you are in bankruptcy, there is no easy way to undo it. You find out that you have missed mandatory court appearances. A dismissal of your case is very likely because of failure to appear in court, and your home will go into foreclosure.

Your credit now has a foreclosure AND a bankruptcy as well, and you have paid thousands in fees to a foreclosure rescue con artist. Any mortgage payments you paid to him, he pocketed.

Red flags to look for:

• Again, the up-front fee is a definite red flag.

• Requiring paperwork early on with all your personal info.

• Anyone who says you should make your mortgage payments to them and not your lender.

• Paperwork with empty blanks.

• The "specialist" advises you not to communicate with your lender.

• You are instructed to ignore mail and phone calls from the court or the bank.

Things to keep in mind:

• Check a person out before you give them private financial info.

• All payments go directly to the lender – always

• NEVER CUT OFF COMMUNICATION WITH YOUR LENDER.

• Court dates sent to you are for mandatory appearances. If you don't show, the court is much less likely to act favorably towards you.

• DON'T BURY YOUR HEAD IN THE SAND. Stay on top of your "representative". Read all your mail. Answer all correspondence from the court, your lender, and your other creditors.

• Even if you have hired a professional to help you get out of foreclosure, stay personally involved in the process.

• The best way to know if your specialist is doing his job is by keeping in touch with your lender along the way.
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