Avoid Foreclosure Scams by Watching for Warning Signs

On June 20, 2011, in Equity, by Justin Velthoen
Watch closely to avoid foreclosure scams.

Watch closely to avoid foreclosure scams.

At a time when so many homeowners face property ownership difficulties, foreclosure scams are a real concern that should make even the most desperate homeowner take caution when looking for assistance. Dishonest financial counselors often make promises they can’t keep, request information that isn’t relevant to the foreclosure process, and charge unnecessary up-front fees, all in the name of playing on a homeowner’s desire to avoid losing his or her home.

When facing the prospect of foreclosure, homeowners should remain guarded against foreclosure scams by watching for warning signs. The Federal Reserve Board offers these tips as a way to avoid making a challenging situation get worse by falling victim to a foreclosure scam.

Work with a nonprofit, HUD-approved counselor

Verify that the counseling agency with which you’re dealing is on the Department of Housing and Urban Development’s list of approved agencies. Available on the HUD website, this is easy information to track and can spare you from financial headaches that can last a lifetime. If a foreclosure counselor contacts you, whether by mail, phone, email or face to face, take a few minutes to verify their credibility before speaking with them regarding the specifics of your financial situation.

Don’t pay for financial counseling

The majority of HUD-approved housing counselors provide no-cost services; other provide low-cost. If you’re contacted by a financial counselor offering to help you out of your unaffordable mortgage situation, any request for fees or charges should serve as a sign that their intentions are less than honorable. Other warning signs are counselors who accept payment only in the form of cashier’s check or wire transfer, and counselors who collect up-front fees before they’ve performed any service.

There’s no such thing as a “guarantee”

No reputable counselor will guarantee to save your home from foreclosure. A legitimate counselor will certainly make every attempt to stop the foreclosure process, but never will they promise that foreclosure can be avoided. If a counselor makes such a claim, let that be a warning that your future financial stability is not driving his or her intentions.

Don’t sign any document without fully understanding it

If a financial counselor demands (or even subtly presses) that you sign paperwork before you’ve had a chance to carefully read it and understand it, decline. Under no circumstances should you be asked to sign documents you haven’t seen, or worse, be asked to allow a counselor to sign them on your behalf. Always consult with a licensed attorney before signing any paperwork that transfers the title of your home.

Trust your instincts and report any suspicious behavior

If a financial counselor’s conduct raises any red flags and makes you feel like you’re the target of a foreclosure scam, seek professional help. Seek assistance from one of the government agencies that exist to protect consumers, or contact a trustworthy professional like Toucan Homes. We at Toucan Homes are real estate professionals who can provide general answers to your real estate-related questions, and possibly the assistance you need to avoid the long-term financial damage of foreclosure and/or bankruptcy.

Have you been a victim of a foreclosure scam? Use our message board to tell us what happened. Know a friend facing foreclosure difficulties? Share this post on Facebook and share the information.

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