Scams Target Homeowners, Increase Foreclosure Risk

Reports of a declining national foreclosure rate may be of little comfort to many who are still facing a Miami foreclosure amid stagnant wages, stubborn unemployment and rising prices for just about everything.
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In fact, Florida continues to have the highest rate of foreclosures in the country. While the national rate fell to a little over 1 percent last year (from 2.23 percent in the midst of the housing market crash), according to RealtyTrac, that still means that one out of every 96 homes had a foreclosure filing in 2013. In December, 19 percent of all houses in the U.S. were “deeply underwater,” which meant homeowners owed at least 25 percent more on their mortgages than what their home was worth.

In this climate, it’s easy to understand how so many homeowners could fall victim to predatory scams targeting struggling homeowners. These are companies or individuals who, through telemarketing or some other advertising, promise to help homeowners stop an impending foreclosure or lower their monthly mortgage payment.

Now, there are legitimate sources of help for these kinds of services. But there are also just as many trolls, hoping to take advantage of people’s desperation.

Just recently, the Federal Trade Commission reported a $3.6 million settlement with an alleged foreclosure relief scammer, who has additionally been order to give up all assets, effectively shutting down the operation. The FTC reports that the scam operated under a variety of different names, but was essentially a sham non-profit.

Consumers were lured in with pledges that if they enrolled, they could save their homes from foreclosure, or significantly reduce the rate of their monthly mortgage. The firm promised to conduct audits of homeowner loans, and from there, offer legal help to fend off lenders.

Borrowers were told that an “expert mortgage foreclosure defense attorney” would be assigned to their case, and that this individual would “halt the foreclosure process.”

But instead of doing any of that, the company charged people advanced fees of between $600 to $800 a month, and then proceeded to do absolutely nothing for them. People were driven deeper into debt. Foreclosure proceedings marched forward. Many still lost their homes.

What this company did was a crime. It violated the Mortgage Assistance Relief Services Rule’s ban on advance fees for mortgage relief. The company also reported overstepped the parameters of the Do Not Call Registry guidelines.

But the case is far from isolated. Other possible scams include cash-out refinancing, equity stripping and hard money lending. Many homeowners have fallen victim to such schemes, and it’s not because they are fools. It’s because they want to keep their homes. It’s difficult for anyone to believe that someone would target them at such a desperate hour of need.

The people behind these operations, however, are ruthless. Despite federal regulators cracking down on such predatory actions, these companies aren’t always stopped before it’s too late.

That makes it incumbent upon the homeowner to practice extra vigilance.

For starters, avoid agreeing to any deal from a company that contacts you unsolicited over the phone. Chances are, they’re fishing.

Secondly, don’t ever sign any contractual document – particularly as it pertains to your mortgage – without first having it submitted for legal review by a legitimate attorney.

Additionally, you want to make sure that if you transfer ownership of any property that you are also released from the mortgage or financial liability.

Finally, if you are in desperate to save your home, don’t rely on a deal that sounds too good to be true. You know the old adage. Instead, contact an experienced foreclosure defense attorney with a proven track record of success.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Many scams target struggling homeowners, Jan. 16, 2014, By Bill Moak, Clarion Ledger
More Blog Entries:
Florida Foreclosure Aid Programs Not Helping Homeowners As Promised, Jan. 20, 2014, Miami Foreclosure Defense Lawyer Blog