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Don’t fall prey! How to spot home predators

More Americans than ever are in danger of losing their houses. Some people who call themselves foreclosure consultants claim they can  help. But Barbara Corcoran says be careful or you might be scammed. TODAY’s real estate contributor reveals how to recognize the cons, the five most common scams, where to get help and more.
/ Source: TODAY

Fraudulent foreclosure consultants use half-truths and outright lies to lure in clients and promise money-back guarantees. They market their services aggressively by phone, e-mail, late-night TV ads, leafleting church parking lots, posting fliers on telephone poles and mailing letters marked “urgent” to vulnerable homeowners. But there are legitimate consulting companies out there too. Here’s how to recognize the cons from what’s legit.

The 5 most common scams

1. The Obama rescue plan scam
Some rescue companies are charging thousands to modify customer loans under the new Obama housing relief plan. But you can find out all you need to know yourself and see if you’re eligible at MakingHomeAffordable.gov or by calling 888-995-HOPE.

2. Bait and switch
A scam artist masquerades as a legitimate housing counselor and presents you with what appears to be an application for refinancing. But it’s actually a transfer of title and you lose your home.

3. Rent-to-buy scheme
Someone offers to buy your distressed home cheaply and rent it back to you. They promise that once you get your finances in order, you can buy it back. Sometimes it’s a win-win proposition for everyone, but it’s most often ripe for abuse. The con man usually strips your home’s equity and creates lease terms you can’t meet. Then they quickly evict you.

4. The middleman scam
An alleged rescuer charges you an up-front fee, sometimes thousands of dollars, to negotiate a deal with your lender. They promise to handle all the details for you and tell you not to contact your lender, lawyer or credit counselor — they’ll handle everything. You make your mortgage payments to the middleman while he negotiates with your lender, but he soon disappears along with your money.

5. The bankruptcy scam A con artist promises to negotiate with your lender or get refinancing on your behalf, once you pay an up-front fee. They never contact your lender or refinance your loan, but they pocket your money and file for your bankruptcy. The bankruptcy temporarily stops the foreclosure, leaving you happily in the dark until the expensive bankruptcy goes forward, ruining your credit for the next 10 years. The common red flags 1. Up-front charges
Legitimate counseling is offered by social service and government agencies and is usually free.

2. A promise to stop your foreclosure ‘no matter what’
Scam artists love simple, straightforward messages like “Stop foreclosure now!”, “Keep your home!”, “Save your home, guaranteed!” and “Free consultation.” Don’t believe them.

3. ‘Don’t talk to your lender …’
Or your lawyer or your credit counselor! Your lender is the first person you should contact if you’re having trouble meeting your mortgage. Always open the mail and answer the calls from your lender.

4. ‘I’ll fill out the paperwork for you’ Don’t sign the paperwork if you haven’t had time to look over or don’t understand it. Never sign anything under duress or anything with blank spaces. And never sign away ownership of your property without the advice of a good attorney.

5. Unexpected solicitations by mail, e-mail, phone or in person The worst scammers will even play on an alleged connection with you, like attending the same church or having also come out of the military.The dos and the don’ts

  1. Make sure the housing counselor is certified by the Department of Housing and Urban Development (HUD.gov or 202.708.1112).
  2. Use an attorney. They’re well worth the money, or you can find free legal help through your local bar association or local law schools.
  3. Always listen to your gut. If something seems too good to be true, it always is, and if you have a bad feeling about the individual, walk away.
  4. Do ask for references from the would-be “counselor.” You want to work with someone with a successful track record and the right training.
  5. Don’t believe the promise of a money-back guarantee. Try to get your money back and chances are you’ll get nothing but a runaround.
  6. Don’t sign over ownership of your property. Signing a quitclaim deed or warranty deed transfers your ownership rights. Legitimate foreclosure consulting businesses don’t ask you to do it.
  7. Don’t sign a contract to sell. It’s just like signing away your ownership rights.
  8. Never grant a power of attorney. A power of attorney gives away permission to sign contracts to sell or transfer your property ownership rights.

Where to get free help

How to report mortgage fraud
You can call the attorney general’s office of your state, or any of these help lines: