Foreclosure fraud is rampant these days. You may have invested all your hard earned money in buying your dream home. A couple of missed mortgage payments may compel you to lose your home forever. If you are unable to make your mortgage payments, you may be a probable candidate for foreclosure. The more you default in your mortgage payments, the closer you head for foreclosure.

If you happen to receive a foreclosure notice, it is best to keep the creditor’s Loss Mitigation Department informed about the cause of your defaults and the probable date when you can make payments.

You should be very careful about the “foreclosure rescuers”. They claim to free your home and pose as foreclosure experts. People in the community get to know once the lender sends a foreclosure notice. You start receiving mails, calls and letters asking you to avail services of the foreclosure consultants. Not all are involved in fraudulent activities but some of them may be scammers disguised as foreclosure experts.

Foreclosure fraud or foreclosure scam can be of different types. Some of the common types of foreclosure fraud are given below-

1. Equity stripping

In equity stripping, an individual posing as a mortgage lender approaches you. He offers to get a loan for you because he is aware of your financial situation. He tries to convince you to manipulate your income and amplify it. Under such circumstances you accept his offer because you are need of the money. If you miss a mortgage payment, your home gets foreclosed.

2. Equity skimming

In this kind of a foreclosure scam, an individual posing as a buyer approaches you. He tries to convince you so that you sell your home to him at a price much below the market value. He also assures you to repay your mortgage and requests you to transfer the property deed to him. If you succumb to his pressures, he will rent out your premises and earn the monthly rentals. However, he does not make any mortgage payments leading to foreclosure.

3. Loan flipping

If you have availed a loan, it may be that the creditor will offer to refinance your existing loan, so that you can use the proceeds of refinancing for renovating your home etc. He also asks you to make some payments to get the loan refinanced. The lender fails to inform you that the charges and the additional fees for refinancing the existing loan are much higher as compared to the refinancing amount.

4. Fake counseling firms

You will come across many fake counseling companies offering to bail you out of foreclosure. They charge exorbitant fees for making few fake phone calls. Their main objective is to prevent you from getting the correct type of foreclosure help.

5. Fake loan transaction

You should avoid signing any legal document before getting it verified by your attorney. A transaction is considered phony or fake when a creditor approaches you with refinancing loan papers which state that you can update your neglected loan account. The contents of the document may state that you are actually transferring the property title to the lender.

6. Internet and scams over the telephone

You may receive calls or emails from lenders stating that they have a very good offer by which you can save your home. With this they try to extract important information about your social security number, your bank accounts. It is best to avoid such deals as these may land you in serious trouble.

Don’t allow yourself to get exploited by fake companies who are on the look out to make quick and easy money. You should be well aware of the various facets of foreclosure and act accordingly.

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