Foreclosure Scams by sofiaie


									Foreclosure Scams
Facing the threat of losing a home, a home owner will be plagued by individuals and
companies offering to "help" the person out of his or her difficult financial situation. In
most cases, these people are out for one thing--making money from someone's problems.
These scams will come in many shapes and varieties...ranging from direct mail offering
to "negotiate" on behalf of the home owner for a nominal fee to people knocking on the
door offering to help out by reinstating the loan, taking title and leasing the home back to
the individual. People facing foreclosure are vulnerable to con-artists and scams.
However, using a little common sense any home owner can avoid being taken advantage
of and find a viable and ethical solution for his or her dilemma.

In California, a lender initiates the foreclosure process by filing a Notice of Trustee Sale
with the county recorder. This notice is the equivalent of posting a large 50 foot neon
sign above someone's house saying, "Here I am, take advantage of me!" because shrewd
individuals and companies know that the home owner is in trouble and will often times
do anything to resolve the problem.

The following lists several ploys implemented by these individuals:

Short Term Loans. People may approach financially troubled home owners with the
possibility of lending him or her a short term loan, and in some cases offer a loan with no
payments for a certain period of time. These loans have high interest rates, require a
balloon payments (where the home owner must pay off the loan by a certain date), or
other features that may sound attractive. In reality, these loans are additional liens against
a home and if the home owner fails to make a monthly payment or the balloon payment,
the home owner could face foreclosure again.

Equity Splitting. Real estate agents (many claiming to be "pre-foreclosure" specialists)
offer reinstate a person's loan and sell the house with the idea of salvaging any accrued
equity and appreciation in the home. The catch is that the home owner must split the
earnings with the agent instead of paying a commission. The reality is that the home
owner could have hired a competent agent and accomplished the same end result with
less money out of pocket.

Debt Negotiating & Counseling Agencies. Many companies, reputable and not-so-
reputable, offer to negotiate or consolidate the debt for the home owner. The catch is that
the home owner must prepay for these services (many the home owner can do on his or
her own accord). These individuals do not offer anything that you cannot do on your own
or that other non-profit agencies will provide free of charge. If you need a debt
negotiating agency, contact your local Consumer Credit Counselors.

"Financial Service" Companies. There has been a proliferation of individuals, often
posing as a financial services company, that offer to assist home owners facing
foreclosure with everything from tax advising, debt management, real estate sales and
pre-foreclosure sales. The reality of these individuals is that they do not run legitimate
corporations (according the California Corporations Commission) and are not legally
licensed as required by the California State Banking Department for debt or credit
counseling. Be wary of anyone who wears a thousand hats for any occasion or pay money
for their services upfront!

Visitors. Expect many people, including investors and real estate agents, to visit your
home. They will paper your house with flyers, knock on your door at all hours, and stalk
you and your family until they have an opportunity to speak with you. The worse
perpetrators are individuals posing as government employees dispatched to your home to
assist you. The lender, the County, and the Federal government will not send out personal
representatives to assist you unless you have initiated the call to the right agency.

Bankruptcy. No matter what an attorney may tell you, bankruptcy does not stop
foreclosure. It is true that bankruptcy does suspend the foreclosure process.

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