When facing financial distress that places your home at risk, many homeowners may understandably be tempted by loan modification, short sale, or foreclosure rescue offers that may seem too good to be true. Every mortgage holder, even if not currently facing financial trouble, should be aware of the scam artists that are targeting Washington property owners.
Following the nationwide mortgage crisis in recent years, several types of mortgage fraud scams have sprung up nationwide, whereby illegitimate companies or scam artists have commandeered otherwise legitimate loan modification and foreclosure-avoidance tools:
In a loan modification, a company or broker will typically approach the mortgage holder offering to renegotiate the terms of the mortgage on his or her behalf opposite the lender. Some companies demand money up front, but never contact the mortgage holder. Your only remedy is a private lawsuit.
Foreclosure rescue schemes can take many forms, including:
- Phony Counseling. If your house is placed in foreclosure, an individual or company may approach you and try to hurry the foreclosure process or offer you foreclosure counseling services for a fee — these so-called “counseling agencies” are often offering services that are available for free
- Equity Skimming. An additional foreclosure rescue scheme, known as “equity skimming,” is where an alleged “buyer” approaches you and offers to pay off your mortgage or give you a percentage of the funds received when the property is finally sold — the buyer agrees to lease the home back to you, allowing you to remain in your home while you pay rent, but then fails to make the required mortgage payments causing the lender to ultimately foreclose on the property
A short sale is a type of real estate transaction where the sale price of a home is insufficient to repay the outstanding debt remaining on the home mortgage plus the costs of selling the property, and the selling homeowner is unable to pay the difference in price. The mortgage lender must agree to the transaction terms, but it is important to remember that a short sale does not necessarily imply that the creditor will relieve you of your responsibility for any unpaid difference, interest or penalties. Beware of predatory agencies offering “short sales” as the solution to your mortgage woes.
If you are facing foreclosure and have received an offer to save your home that seems just too good to be true, our bankruptcy attorneys at BK Lawyers LLC, can help you determine if the proposal is legitimate before you sign any documentation. Contact us today to schedule your free initial consultation.