Fraud Prevention and Your Safety
You should be aware of foreclosure scams when seeking assistance with a short sale or other option to avoid foreclosure.
Be sure to follow some basic rules to avoid scams:
- DO NOT sign documents you do not fully understand.
- DO NOT sign any documents you feel pressured into signing. Legitimate companies will allow you time to review your options, as well as any documents that are needed.
- DO NOT sign over your deed without the completion of a sales contract or other closing.
- DO NOT make mortgage payments to anyone other than your mortgage lender.
- DO NOT pay any amount of up-front fees to anyone who claims to stop foreclosure.
- Be sure to seek the advice of an attorney with questions regarding legal matters.
OCC Consumer Tips and Common Scams
The United States Office of the Comptroller of the Currency, Administrator of National Banks warns of scams related to mortgage modification and foreclosure advoidance, and gives the following examples:
You can review the entire OCC document by downloading this printer-friendly PDF:
Freddie Mac offers additional information on Mortgage Fraud Schemes:
- "Foreclosure 'rescue' and refinance fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even "guarantee" to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly - along with significant, up-front fees - and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don't follow that advice."
- "Fake 'government' modification programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists' claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer."
- "Leaseback/rent-to-buy schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. If you do not comply with the terms of the rent-to-buy agreement, you will lose your money and face eviction. The agreement may be very hard to comply with, because it may require, for instance, high up-front and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. They simply want your home and your money."
- "Bankruptcy scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true - but only temporarily. Filing bankruptcy brings an "automatic stay" into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years."
- "Debt-elimination schemes. Scammers may claim to be able to 'eliminate' your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that 'secret laws' can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims."
The OCC lists the following Ten Warning Signs of a Mortgage Modification Scam.
"Pay us $1,000, and we'll save your home. Some legitimate housing counselors may charge small fees, but fees that amount to thousands of dollars are likely a sign of potential fraud— especially if they are charged up-front, before the 'counselor' has done any work for you."
"I guarantee I will save your home— trust me. Beware of guarantees that a person or company can stop foreclosure and allow you to remain in your house."
"Sign over your home, and we'll let you stay in it. Be very suspicious if someone offers to pay your mortgage and rent your home back to you in exchange for transferring title to your home."
"Stop paying your mortgage. Do not trust anyone who tells you to stop making payments to your lender and servicer, even if that person says it will be done for you."
"If your lender calls, don't talk to them. Your lender should be your first point of contact for negotiating a repayment plan, modification, or short sale."
"Your lender never had the legal authority to make a loan. Do not listen to anyone who claims that 'secret laws' or 'secret information' will be used to eliminate your debt and have your mortgage contract declared invalid."
"Just sign this now; we'll fill in the blanks later. Take the time to read and understand anything you sign."
"Call 1-800-Fed-Loan. This may be a scam. Some companies trick borrowers into believing that they are affiliated with or are approved by the government or tell you that you must pay them high fees to qualify for government loan modification programs."
"File for bankruptcy and keep your home. Filing bankruptcy only temporarily stops foreclosure. If your mortgage payments are not made, the bankruptcy court will eventually allow your lender to foreclose on your home. Be aware that some scammers will file bankruptcy in your name, without your knowledge, to temporarily stop foreclosure and make it seem as though they have negotiated a new payment agreement with your lender."
"Why haven't you replied to our offer? Do you want to live on the streets? High-pressure tactics signal trouble. If someone continually contacts you and pressures you to work with them to stop foreclosure, do not work with that person. Legitimate housing counselors do not conduct business that way."
Tampa Bay Short Sales has always been an industry leader in the protection we provide to our clients in writing.
We are excited to announce that after February 1, 2011, the Federal Trade Commission requires the following disclosures on ALL short sale professionals' websites.
When looking for a professional company to assist you in your short sale, you should look for the following information and disclosures on their website.
The following disclosures are being made pursuant to the Federal Trade Commission’s Mortgage Assistance Relief Services (“MARS”) Rules (16 C.F.R. Part 322).
IMPORTANT NOTICE: Before using this service, consider the following information:
Tampa Bay Short Sales does not and cannot charge you any upfront fees in conjunction with agreeing to buy your dwelling via a short sale or for providing you any other type of mortgage assistance relief service.
Tampa Bay Short Sales is NOT associated with any government agency or program, and our company is NOT approved by the government or your lender(s).
Even if you accept this offer and use our service to sell your dwelling via a short sale, your lender may not agree to change your loan or approve the short sale.
Tampa Bay Short Sales is not and will not provide you with legal advice or representation.
At this time no one knows how long it will take to complete the short sale. There is no guarantee that the short sale or any other type of mortgage assistance relief service will be approved by your lender(s).
You may stop doing business with us at any time with regard to the short sale, our short sale negotiation services(if any), or real estate brokerage services(if any) which are being provided to you as a part of our effort to buy your house.
You may accept or reject the offer of mortgage assistance including the short sale approval that we may obtain from your lender or servicer. If you accept the offer, you may have to pay us a fee of $0 (zero dollars) for our short sale negotiation services. This fee and all other fees associated with the short sale of your dwelling will be listed on the HUD 1 closing statement. You may be obligated to pay us or an affiliate a commission for real estate brokerage services if you reject a written short sale offer acceptable to the buyer.
If you stop paying your mortgage, you could lose your home and damage your credit rating.
Any decision to stop or limit communication with your lender should be determined by you and your legal counsel in accordance with the Fair Debt Collection Practices Act.