Foreclosure Rescue Companies May Promise to Save Your Home, but Only Empty Your Wallet
According to a recent article from the BBB: Aug 16th Arlington VA
Across the U.S., homeowners facing mortgage foreclosure are being scammed by foreclosure rescue companies promising to save their house but that only take their money. In light of this emerging trend, the Better Business Bureau (BBB) warns that gloomy forecasts for the housing and financial markets means that increasingly more people could fall prey to mortgage foreclosure scams in the coming months and years.
“According to estimates, as many as 1.7 million homeowners could lose their house to foreclosure in the next couple years: said Steve Cox, spokesperson for the Better Business Bureau. These people will be in the desperate position of trying to save their home and they’ll look for someone to trust. Unfortunately, con artists are seeing their chance to step in and make a fast buck off of troubled homeowners from Palm Springs to Pittsburgh.
In recent months, the BBB has heard from victims of foreclosure rescue schemes in almost all 50 states. Not surprisingly, states with the highest foreclosure rates such as Georgia, Colorado and Ohio have an exceptionally high number of complaints for companies offering foreclosure rescue.
BBBs nationwide have received hundreds of complaints from homeowners who enlisted the help of unscrupulous mortgage foreclosure rescue companies and they all tell a similar story.
Typically, homeowners report that they were either contacted directly by a mortgage foreclosure rescue company or came across a Web site while searching for help to stop foreclosure on their home. The companies claimed they would renegotiate the terms of their mortgages and stop foreclosure actions, or the homeowners would get their money back. Victims, who were desperate to keep their homes, paid as much as $5,000.00. In the end, the companies did very little work or often nothing at all. Most victims, not only lost their homes, but they also have not been able to get promised refunds, either.
BBB's across the nation are hearing the same story from victims over and over again, added Cox. Desperate homeowners are duped into a false sense of security by crooked companies and think their prayers have been answered and their homes will be saved. Unfortunately, many people are losing a lot of money and their houses through untrustworthy foreclosure rescue operations.
The BBB offers the following advice for homeowners facing mortgage foreclosure:
- Contact your BBB or go to www.bbb.org to request a free Reliability Report before paying any “rescue” company. You can also check with your state Attorney General and state Real Estate Commission.
- Beware of the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that “help” is available from someone who has your best interests in mind.
- Talk to your lender. The first thing you should do is talk to your mortgage company about how to restructure your loan payment or refinance.
- Never sign a contract under pressure and never sign away ownership of your property. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.
- If you feel you have been taken advantage of by an unethical mortgage foreclosure “rescue” company, file a complaint with your BBB at www.bbb.org.
For more trustworthy advice and tips for troubled homeowners, go to www.bbb.org.
About the BBB System
BBB is an unbiased organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB membership contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business Reliability Reports and charity Wise Giving Reports, and educational information on topics affecting marketplace trust. To further promote trust, BBB also offers complaint and dispute resolution support for consumers and businesses when there is difference in viewpoints. The first BBB was founded in 1912. Today, 128 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than 3 million local and national businesses and charities. Please visit www.bbb.org for more information about the BBB System.
If you are a consumer who is seeking additional information, or need assistance with a complaint against a business, please contact your local BBB, visit the BBB web site (www.bbb.org) or call 703.276.0100.
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Today's Top Real Estate News
Provided by Inman News Features
May 15, 2008 02:21 PM
May 15, 2008 02:21 PM
By Benny Kass
Inman News
DEAR BENNY: I plan to purchase a home at a foreclosure sale. I think I can get it cheaper that way than buying it from the current owner. But I want to rent it to the current, soon-to-be former, owner. He's a bullheaded dunderhead, but he's family and I want to help him out. Once he gets back on his feet I might sell it back to him. However, I'm told that it is illegal to foreclose on a home and then rent it to the former owner. --Gene
DEAR GENE: There are a large number of predators throughout the United States that prey on homeowners who are in financial trouble. Some of these characters outright lie: They tell the homeowners that they are going to lend them the money they need to stop a foreclosure and all they have to do is sign a promissory note and a deed of trust. But the unwitting homeowner does not realize that he or she is actually signing over a deed to the house. There have been many lawsuits against these individuals that have resulted in the deed being thrown out and the house restored to the original owner.
There are other people who will buy homes from financially distressed homeowners, and let them rent the house back for a fixed term. Typically, the sale price is the amount of the current mortgage, with a little extra thrown in. The arrangement gives the homeowners the ability to buy back the house when their financial situation gets better. But often the repurchase price is steep -- and way above the real market value.
Many states have adopted legislation prohibiting (or at least restricting) this "buy-back" provision. You would have to talk with an attorney in your area to get an opinion on whether your plan will work.
Since you will be buying the house at a foreclosure sale, I do not think that any such laws will impact on you. But you should confirm this with your attorney.
I have a say that you are either a saint or a "dunderhead" also. You want to rent the house back to the family that is about to lose the house. If you are legally permitted to do this, make sure that you have a strong lease, that you understand and comply with the landlord-tenant laws in your state, and that you satisfy yourself that your prospective tenant will be able to make the monthly payments.
