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Are you having trouble making your home mortgage payments? Are you facing foreclosure on your home? Get all the facts before you pay someone to help you work out your mortgage problems.
“Bankruptcy foreclosure scams” target people whose home mortgages are in trouble. Scam operators advertise over the Internet and in local publications, distribute flyers, or contact people whose homes are listed in the foreclosure notices. Sometimes they direct their appeals to specific religious or ethnic groups.
These scam operators may promise to take care of your problems with your mortgage lender or to obtain refinancing for you. Sometimes they also ask you to pay your mortgage payments directly to the scam operator. They may even ask you to hand over your property deed to the operator, and then make payments to the operator in order to stay in your home.
But instead of contacting your lender or refinancing your loan, the scam operator pockets all the money you paid, and then files a bankruptcy case in your name — sometimes without your knowledge.
A bankruptcy filing often stops a home foreclosure, but only temporarily. If a bankruptcy is filed in your name but you don’t participate in the case, the judge will dismiss the case and the foreclosure proceedings will continue.
If this happens, you will lose the money you paid to the scam operator — AND YOU COULD LOSE YOUR HOME. You will also have a bankruptcy listed on your credit record for years afterward.
Proceed with care if an individual or company:
Calls itself a “mortgage consultant,” “foreclosure service,” or similar name.
Contacts or advertises to people whose homes are listed for foreclosure.
Collects a fee before it provides services to you.
Tells you to make your home mortgage payments directly to the individual or company.
Tells you to transfer your property deed or title to the individual or company.
If you can’t pay your mortgage, call your mortgage lender or contact a lawyer for help. Your state or local bar association may be able to help you find low-cost legal help.
If you think an individual or company is running a mortgage foreclosure scam, contact the local office of the United States Trustee. The United States Trustee is a Justice Department official who monitors the bankruptcy system. Look for your local United States Trustee’s telephone number in your telephone directory or on our web site at www.usdoj.gov/ust/eo/ust_org/office_locator.htm.
Press Contact:
Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411
From the Department of Justice
Read on how to avoid mortgage scams from the FBI -
Mortgage Debt Elimination Schemes
Be aware of e-mails or web-based advertisement that promote the elimination of mortgage loans and credit card and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. These documents do not achieve what they claim.
Remember, there is no magic cure-all to relieve you of debts you have incurred.
Borrowers may end up paying thousands of dollars in fees without the elimination or reduction of any debt.
Foreclosure Fraud Schemes
Perpetrators mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed, usually in the form of a Quit-Claim Deed, and up-front fees. The perpetrator profits from these schemes by re-mortgaging the property or pocketing fees paid by the homeowner without preventing the foreclosure. The victim suffers the loss of the property as well as the up front fees.
Be aware of offers to “save” homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure.
Seek a qualified Credit Counselor or an attorney to assist you.
Predatory Lending Schemes
Before purchasing a home, research information about the prices of homes in the neighborhood.
Shop for a lender and compare costs. Beware of lenders who tell you that they are your only chance of getting a loan or owning your own home.
Beware of “No Money Down” loans. This is a gimmick used to entice consumers to purchase property that they likely cannot afford or are not qualified to purchase. Beware of the mortgage professional who falsely alters information to qualify the consumer for the loan.
Do not let anyone convince you to borrow more money than you can afford to repay.
Do not let anyone persuade you into making a false statement such as overstating your income, the source of your down payment, or the nature and length or your employment.
Read and carefully review all loan documents signed at closing or prior to closing for accuracy, completeness and omissions.
Be aware of cost or loan terms at closing that are not what you have agreed to.
Be suspicious if the cost of a home improvement goes up if you accept the contractor’s financing.
