Foreclosure Rescue ScamsPart 3) Once they find you, how scammers get their hooks into you
Most distressed homeowners feel unbelievable pressure once they receive that dreaded default notice. They are in uncharted waters and feel helpless to deal with the bank on there own. They feel that if they are going to save their home, they have to act quickly. Making decisions under stress can lead to making poor decisions. That sounds pretty basic, but it is so true. The systems in place in the banking industry are beginning to change, but for the most part, banks are still kind of "winging it" when a distressed homeowner approaches them to try and work things out. There has been no protocol placed to guide the foreclosure work-out process with a homeowner. The foreclosure crisis has created an environment that is new and unorganized. The scam artist sees this as an environment that is rich in opportunities to make a fast buck. The elderly, the uneducated, and non-English speaking homeowners are at particular risk for foreclosure rescue scams. Elderly homeowners typically have lived in their homes for many years and have a wealth of equity. The uneducated and people who do not speak English really do need someone to help them. This need for help makes them vulnerable. Here are 8 popular tactics that fraudsters use to get their hooks into their victims: 1. Bombardment. A single con artist can target one victim while posing as many different services. For example, he will send a postcard advertising a refinance service. Then send a letter proposing loan modification under another name. Then he will give you a phone call posing as an investor who wants to pay cash for your house and can close in 7 days. He will continue in this fashion with several contacts over a period of time. All of the contacts appear to be from different companies, but are actually from the one scammer. The homeowner thinks he is being solicited by several different venders. The foreclosure rescue scammer may even play one company against another, warning you that "those guys are scam artists." With dozens of turns at bat, the scammer has a good chance of hitting a home run sooner or later. 2. Cut-off. The scammer creates an atmosphere of "us against them". He paints the lender as the "bad guy", and deepens the homeowner's distrust by saying things like, "That big corporation doesn't care about the little people like us." "They won't think twice about tossing you out on the street. I see it happen all the time." "That bank is out for one thing: to take your house." The scammer appears to be the homeowner's only friend and the lender seems to be the enemy. If the homeowner has not had a good relationship with the lender up to this point, everything the con man says makes sense. So the homeowner follows the scammer's advice and cuts off communication with the lender. 3. Panic party. The homeowner is already in panic mode. The scammer comes in and feeds that panic with his own words of "grave concern." He affirms their fear that time is about to run out. He rushes them through the paperwork and does not provide the homeowner with copies. The homeowner has no idea what he has signed. 4. Calming the storm. Contrary to the above tactic, this scammer takes the opposite approach. His demeanor is calm and reassuring. He appears confident and provides solid references while telling of the many families that he has befriended as he helped them through their ordeal. Many people trust their own ability to spot a liar. Scammers count on that. They consider it a challenge to win over someone's trust. It's all a big game to them. And they are in it to win. 5. Innocence. Some people are naturally trusting. It is not a bad thing to give people the benefit of the doubt. But it is these innocent and trusting types that scammers usually latch onto. Most people that are facing foreclosure have never been through it before. If a scammer can find a trusting soul in a vulnerable situation (like foreclosure) the scammer's job is made much easier. 6. Circle of Influence. This is simply a dishonest person who creates an association with a group (social, professional, religious, racial, or community group) purely for the purpose of establishing common ground. Then he exploits the bond he creates. We tend to let our guard down when we are around others with whom we have things in common. It is human nature to trust people that we feel are like us. Once the con artist is confident that the group has accepted him, he begins to work his scam. Sometimes he victimizes several people in the group before anyone catches on. 7. Deceit. Con artists are adept at twisting words and stating half-truths. When it comes to paperwork, never take one person's word for what it says. Tell the person that you want to keep the paperwork and look it over for a few days. Get a friend or someone you trust to read over the papers before you sign. If the wording is too complex or there are blanks with nothing filled in, do not sign. 8. Lack of knowledge. Many people are intimidated by contracts – especially those regarding mortgages and real estate. If you take time to read slowly, you should be able to figure it out. When I was in real estate, I took classes on how to read, write, and understand contracts. I was amazed at how much I understood if I just slowly read it, taking one statement at a time. Sometimes I would have to read it out loud several times before I understood. But if I took my time, I usually could make sense of it. If you cannot make sense of what you are reading, do not sign. If you do understand, but discover unreasonable conditions, fees that are not explained, or unfavorable terms in the paperwork, obviously, do not sign. 9. Phishing. This method is in the form of e-mails. The fraudster uses the name of a reputable firm (like Bank of America, Wachovia, etc.). They may even use the name of your lender. The e-mail will look official and may say that your immediate response is needed. They may say that they have funds from a government payout to be deposited into your account. Then they will ask you to confirm your account number and/or your social security number. Once you surrender your personal information, they gain access to your accounts. They may clean out the account, or use your information for purposes of identity theft.
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