Scams to AvoidMassachusetts Foreclosure Attorneys
Scams to Avoid
Shortly after your bank files for foreclosure in court, the local newspaper will have an advertisement that your house will be auctioned off on a specific date and time. Unfortunately, some people will view this as an opportunity to take advantage of you in a vulnerable situation by making promises to you that sound “too good to be true” and that everything will work out if you let them handle your situation. The time-tested advice that still rings true today, is if it sounds too good to be true, then something is wrong.
These predators will show up at your house pretending to be your friend and make promises about how they can solve your problems. In fact, many of them are only interested in stealing your hard earned equity, your money or even your home itself. Of course, not all of these people are bad actors, some of them are professional real estate investors who are interested in honestly helping you. However, the best advice for you to follow is: Do not sign anything until it has been reviewed by a lawyer that you trust.
Many scam artists can be spotted by the official sounding but phony titles they give themselves, such as ‘foreclosure prevention specialist’ or ‘foreclosure prevention consultant’ or ‘home retention professional.’ These titles are red flags and should make you either hang up the phone on them or shut your door on them right away. They will give you false hope, and tell you everything you want to hear. Be very concerned about anyone claiming that they can help you. Tell them that you will be checking out their background and credentials and that should be enough to scare them away. For the really clever scam artists, you will need to know the three primary techniques they will use to try to take advantage of you.
A commonly used foreclosure scams is a technique called equity skimming. Here, a person claiming to be a buyer will approach you and will promise to bail you out of your foreclosure crisis by paying off your mortgage and giving you a sum of money when the property is sold. The “buyer” will probably recommend that you deed the property to them, move out, and cut off all communications with your bank.
Typically the scam will play out by the buyer renting out your home to a third party and collecting rental payments for a few months. During this time they will not make any of your mortgage payments and will allow your lender to foreclose on the property. Signing over your deed to someone else does not relieve you of your obligation on the loan.
If you are reluctant to sell your home to them, they may offer to ‘lease it’ back to you if you agree to transfer the property to them. This option may seem appealing since you can still live in your home – but don’t fall for this scam, which usually has a bad ending for you.
Typically, these crooks will agree to sell your property back to you on a future date after the foreclosure problem is seemingly solved. Arrangements like these usually end up benefiting only the other person and not you. Once you sign over the deed to your home you lose your home forever. Bait & Switch Loans
Another commonplace scam used in foreclosure prevention involves a phony loan deal. You are given official-looking documents that appear to be a refinance and loan that will bring your delinquent payments current. But the documents may be cleverly drawn up to transfer your home to their company for only a fraction of its fair market value. Or if the loan does not transfer title to them it still may have escape clauses or hidden traps that can spell disaster for you, such as extremely high fees, interest-only payments, immediate rate adjustments, balloon payments, and prepayment penalties.
You must know exactly what you are agreeing to because once you sign the documents, even if the terms were not explained correctly, and even if you did not understand the agreement, you will be responsible for those terms upon the funding of the loan. Always have an experienced attorney that you trust review any such transaction before signing anything. If you are pressured or coerced in any way to enter into an agreement regarding your home, call an attorney or the Office of the Attorney General to report them.
The Phony Expert
Yet another unfair and deceptive practice used to separate you from your money is the bogus ‘expert’. In this situation, you are approached by someone offering to help you solve your foreclosure problems for a fee. Usually, the help involves simple tasks that you can do yourself for free – such as negotiating a payment plan with your lender. The worst of these people will simply take your money and you will never see them or hear from them again.
Here are some basic tips to follow to avoid foreclosure scams:
-Never agree to deed or transfer any interest in your property to anyone.
-Assume the person speaking with you is more interested in the money they can make at your expense than they are with solving your problem.
-Never pay money upfront to unlicensed people claiming to be experts or specialists.
-Never sign any document until it has been reviewed by your attorney.
-Do not allow yourself to be intimidated or coerced by pressure or threats from anyone.
-Always remember that verbal agreements mean nothing when it comes to real estate.
-Beware of any contract of sale or loan assumption where you are not fully and formally released from liability for your mortgage debt.
-Check with your lender before entering into any agreements involving your property.
-Never agree to pay a new loan with monthly payments you know you will have trouble making.
-Never sign any document that has blank lines or spaces to be filled in later.
-If you don’t speak English well, use your own translator. Don’t rely on anyone else’s translator.
-If you are selling your home yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact the Attorney General, the Real Estate Board, the Banking Commission, or your local District Attorney’s Consumer Fraud Department.
-Beware of ‘affinity marketing’ techniques offering assistance. For example Christians helping fellow Christians, Hispanics helping Hispanics or Asians helping Asians. There has been an increase in con-artists looking to take advantage of people that share a common interest, religious belief, or social group. Their goal is to gain your trust through a common bond so you will let your guard down.
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