Foreclosures Bring Surge in Home-Rescue Scams

The Legal Aid Society of Middle Tennessee used to get 10 to 12 calls a month about such scams, managing attorney David Tarpley said. Now the office gets about five to 10 a week.
Housing advocates fear the number of potential foreclosure rescue victims could be staggering. There's no way to track how many people are scammed because some seek private help or never report it at all. "What we are talking about is literally thousands of people who may be receiving and responding to these offers every day," said Tracey McCartney, executive director of the Tennessee Fair Housing Council. "And people will do things when they are desperate that are not in their best interest.
You just aren't thinking that clearly, and you're being circled by vultures."McCartney said foreclosure rescuers comb newspaper listings of homes due to be sold at auction, looking for victims.
Tennessee law requires such legal notices. Legal Aid has fought only a few home foreclosure rescue cases, Tarpley said. "They require a lot and can get into some very big, very deep issues," he said. "No one is going to admit that they have scammed your client. They are all going to say that this is a matter of free enterprise, your client was free to do what he or she did and there's nothing wrong with making a profit.
"Some of the “rescuers” offer lease-purchase agreements with terms the original homeowner can't meet, some foreclosure rescuers promise to make calls or take other actions that can "delay" a foreclosure, advocates say. They may call the mortgage company and say the homeowner is going to file for bankruptcy, which can delay the foreclosure 30 to 60 days. It's a call the homeowner could make himself, and sometimes the rescuer never makes the call at all.
The money paid the rescuer could have been used toward back payments. Others use bait-and-switch operations in which homeowners are not told that they are surrendering ownership by taking the rescue loan.
"There are a range of 'rescue' products out there that are not in and of themselves illegal, just deeply deceptive and only make a bad financial situation worse," McCartney said. "Given what so many Americans are facing, people need to be aware, be very aware.
"The FBI has identified foreclosure rescue offers and deals as an emerging type of fraud. Here are tips for those facing foreclosure:

• If you are not behind on payments but anticipate you will soon be, sell the house on the open market, not to a quick sale for cash company.
• If you are behind, call your lender and ask for time or a new payment plan.
• If considering a deal, request completed copies of any foreclosure rescue-related agreements to read and review days before they are due to be signed. At minimum, demand the time to read them at your own pace before signing.
• Make sure that you understand all the terms of any agreement, know what you must pay each month and over the life of the deal and what you stand to lose if you do not.
• Do not sign incomplete documents.
• If you receive a foreclosure notice, do not ignore it. Seek advice from a nonprofit agency or organization that does not stand to profit directly from your decisions.

Source: Legal Aid Society of Middle Tennessee, Tennessee Fair Housing Council, National Association of Attorneys General