Believe it or not, property foreclosures are often at risk of con artists who want to take advantage of a vulnerable homeowner, which is why it’s good to learn how to avoid common foreclosure scams. You’d be surprised by the number of people out there who are willing to prey on the weak during a difficult time.
Don’t let them take advantage of you. Instead, avoid common foreclosure scams by learning what they are.
Equity Skimming Scam
One scam associated with property foreclosures is equity skimming. If you have reached a point of no longer being able to make payments and have put your house up for sale, you might be approached by a person who offers to take over your deed and make your mortgage payments until the house is sold. Afterward, they will claim to give you the money from the sell. Instead, however, they make no payments and occupy your home until it is turned over to the courts. This means, you lose your home and your credit gets ruined.
Bait and Switch
You can avoid common foreclosure scams by keeping a watchful eye for the bait and switch. This scam is similar to equity skimming in that the “buyer” approaches a vulnerable seller and explains that they will bring the mortgage current if the owner signs over the deed. Instead, of that happening, however, an eviction notice appears and the homeowner loses the house.
In this scenario, the homeowner signs the deed over to a person or “company” that claims it will pay off the debt and allow the owner to buy back the home. However, the terms of the agreement are so harsh that the homeowner ends up having to walk away from the house.
This type of scam comes in the form of an online “company” that claims to offer expert assistance with property foreclosures. In other words, they claim they can work with your lender to stop your home from going to auction – that is, in exchange for astronomical fees. Of course, nothing happens to stop the foreclosure and you lose your money.
You can avoid common foreclosure scams by refusing to sign papers you don’t understand, never making mortgage payments to anyone but your lender, and refusing to sign your deed away. By being extra caution, you can become one less victim of scams associated with property foreclosures.