Fraudsters target homeowners in trouble

05.12.09
By Nicholas Storie

Although many first-time homebuyers are finding a number of attractive incentives to take out a mortgage loan and buy a residential property, some current homeowners in financial trouble are finding themselves the target of foreclosure fraud.

In testimony last week before the House financial services subcommittee on housing and community opportunity, the Mortgage Bankers Association chairman-elect spoke about the rise in housing-related scams and how homeowners can protect themselves.

Robert Story explained to the subcommittee that consumers at the "end of their financial rope" are the target of the financial fraudsters who have created a very believable pitch about the status of the borrower and ways to save their property.

"Scammers convince homeowners that they can save their homes from foreclosure through deed transfers and promises to lease or sell back the property – which never happens. In extreme instances, scammers sell the home or secure a second loan without the homeowners' knowledge, stripping the property's equity for personal gain," said Story during his testimony.

MBA's advice to homeowners facing foreclosure is to first contact their mortgage servicer and learn about refinancing, repayment or modification terms that are available.

Another trusted source saying there are no guarantees when it comes to foreclosure promises is the Federal Reserve. The nation's central bank has actively reached out to consumers reminding them that when claims about foreclosure and mortgage loan rescue seem too good to be true - they typically are.

In fact, for borrowers seeking credit counseling, many government-approved housing counseling agencies are available at no charge. When someone tries to charge an astronomical fee, it is another sign of a potential scam.

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Consumers' financial worries now extend to foreclosure scams