Authored by Christopher Reed in Real Estate 
Published on 11-30-2008

Due to the worldwide recession and global financial crisis, foreclosures are becoming more common throughout the fifty states in the US. It is unfortunate enough that people can potentially lose their homes because they can no longer pay on time, but what’s more alarming today is that so called “foreclosure rescue” scams are taking advantage of people who are in dire situations.

How do these con artists trace people who might possibly fall into their traps? In America, it’s fairly simple to find properties that are about to be foreclosed. Private properties that have pending foreclosures are listed in financial institutions or government offices. All the con artists need to do is to read, triangulate the areas and start communicating with the unfortunate individuals.

How do these con artists operate? First, they establish their so-called credibility by posing as legitimate “mortgage consultants” or as a “foreclosure rescue company”. The premise is often simple enough: they will negotiate the foreclosure for you, often for a high fee. The high fee is justified by their assurance that they would be successful in saving the property from complete foreclosure.

If the deal sounds too good to be true, then there is a big possibility that you’re talking to a con artists and not a legitimate financial advisor.

Deception and Trickery

Con artists operate at varying levels and in many ways. While some simply charge and never negotiate with the lenders, some take away large amounts of cash from hapless victims while promising the world to these unfortunate individuals.

1. Repurchasing scam – some con artists will tell you that they are going to purchase the foreclosed property, or will pay off the debt before foreclosure is declared and they will “rent back” the property to you, until you pay off the total amount plus interest and fees. Often, con artists would require you to transfer the deed of the property; when this happens, the balance of power shifts dramatically, and the individual who signs off his or her property this way can be left homeless.
2. Refinancing scams – some con artists promise to give you a sizeable loan to finance the payments of a mortgage gone bad; often, the actual signing for the “loan” means you are signing off your property to the criminal.

Though it is unethical and illegal to do so, if you did sign off your home to someone else, you could end up property-less, and the offender would be able to escape scot-free.

How to Arm Yourself

To legally protect yourself from any form of financial harm, follow these recommendations:

1. Get it in writing – any promise that involves money or your name, or your property should be put in writing and signed by the person.
2. Forget facilitation – if you can pay your lender, pay the lender or the lending institution directly and never trust your hard-earned money to someone else.
3. Contact authorities – if at any point you think you’re being had, make sure to contact federal authorities, even if to just confirm that what you are doing is legitimate and would be beneficial to you.