Although the economy is currently showing signs that it is beginning to turn around, there are still many consumers struggling to make ends meet. There is also a lot of tension surrounding an individual or family's ability to continue paying on a mortgage. There are many people on the brink of foreclosure, and many who are in the process of being foreclosed upon. Unfortunately, there are companies and individuals who are scamming these vulnerable persons. There are a number of ways in which this fraud is perpetrated.
In one such scam, the rescuer says that if you sign the house over to them, the foreclosure will appear on their record and not against you. Of course, all you're doing is signing your house over, which is what you're trying to prevent from being foreclosed upon in the first place.
Another trick is for the rescuer to say that they will cure the default if you pay them money. In theory, this method may work, but there are so many contingencies (not the least of which is whether the company will, in fact, cure the default) that it make the approach very questionable.
Yet another fraud is companies who say they will represent you through the foreclosure process. Many such representatives are not licensed and have little or no training. Others simply take the money and run.
Finally, another way unscrupulous rescuers defraud people in the midst of foreclosure is to offer to buy the house with the option to buy it back at a later time. The reality here is that you will have a LARGER loan and likely a greater interest rate than your current situation, which makes the likelihood of buying back the home very low.
To find our more about foreclosure fraud, see the following links to the Federal Trade Commission and Freddie Mac:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm
http://www.freddiemac.com/avoidfraud/
Lastly, to find out some tips about how to avoid mortgage fraud, see the following Federal Reserve website:
http://www.federalreserve.gov/pubs/foreclosurescamtips/default.htm
