If you have fallen behind on your mortgage or you are going through foreclosure, you may hear from someone offering to save your home or fix your credit.
Watch out! This may be a scam!
You may be giving away your home without even knowing it.
Don't sign anything until you can talk to a lawyer or reliable housing counselor.
You can also report scams here.
You have other options
You don't have to fall prey to a scammer. You have other possible choices, including:
- Reinstatement (or negotiating another type of "workout" plan with your lender)
- Chapter 13 bankruptcy
- Selling your home
You can get help with sorting out your options by calling the Maine Foreclosure Prevention Hotline 1-888-664-2569 or contacting a free HUD-Certified Housing Counselor. For more details on these options, see: Can I Save My Home from Foreclosure? Another choice that you may face is one offered by a "rescue scammer". No matter how good this sounds, just say NO!
Watch this video message from others who have been scammed. Then read about warning signs below.
How do I know who is trying to help and who is trying to cheat me?
Here is how these scam artists work. A scammer will call you, visit you at home, send you an e-mail, or run an ad in a newspaper or on the internet. The scammer will offer you a "great deal" to save your home. Typically, he will tell you that he will pay off your loan for you, rent your home back to you for a few months, and then sell it back to you later when you can afford it. Other "rescue scams" may work a little differently. But, in every case, you end up losing your home and all of your "equity" to the scammer.
Look out for these danger signs
- The scammer urges you to sign papers without giving you the chance to read and understand them.
- The scammer gets you to sign blank documents, to be filled in later.
- The scammer promises you things that are not included in the written agreements.
- The scammer charges you large fees. (Read the papers and make sure you understand the costs!)
- The scammer does not give you written copies of your agreements.
- The scammer may offer to help you find an "investor" to buy and then lease your home back to you.
- The scammer promises to improve your credit.
- The scammer promises you solutions that seem too good to be true.
Trust your instincts. There are no quick, easy fixes. Contact a trustworthy advisor before giving in to tempting, but false, promises.
Here's how a typical rescue scam works:
A scam artist contacts you and offers to rescue you from foreclosure and to save your home. He promises to pay off your mortgage or repair your credit. He has you sign some papers. You agree to pay him rent for 12 months. After that, he will give you the chance to buy your home back from him. Then during the 12 months he evicts you. Or he sells your home to a third party. He changes his mind about selling back to you. Or at the end of the 12 months (or 6 months), you aren’t able to refinance and he keeps your home.
In the meantime, the scammer now owns your home and whatever "equity" you had. Say your home was worth $150,000 and you still owe the bank $50,000. Your "equity" was $100,000. If you had sold your home for $150,000, you would still have $100,000 after paying off your $50,000 loan. Even if the lender had foreclosed and sold it for a lower price, you would probably get some of your "equity" back. But, if you fell for the rescue scam, you are left with NO home and NO money. The scammer stripped your "equity" away from you.
Also, beware of "short sale" offers! Many companies are jumping into the "short sales" market. Some demand a fee up front. Short sales are not always the best solution. Make sure you consider your goals and all your options before selling your home for less than what is owed. Also, there is no reason to pay a fee up front. Most reputable real estate brokers will help you arrange a short sale for free. They will collect their fee out of the sale price - not from you.
If you are in trouble on your mortgage, you’re in a difficult spot. You are probably feeling scared. You may want to keep your home at all costs. You may be worrying about where you will live if you lose your home. Rescue scam artists know how desperate you are feeling. They are trying to prey upon you when you are feeling the most upset and helpless. No matter how bad your situation seems, don't fall for a rescue scam! You have other choices.
Get reliable advice before doing anything that may leave you worse off than you already are.
Updated February 2009; partially revised July 2010 and December 2012
PTLA # 683