Avoid Foreclosure Prevention Scams
The changes in the real estate market has brought out the worst in some. Here are a list of some of the most common foreclosure prevention scams that we have run across. Whenever you are being proposed alternatives to foreclosure, consult with your attorney to learn your liability
Investor Option Contract Scam
This is the most common foreclosure prevention scam and it targets sellers facing foreclosure. If the home is listed for sale, the "investor" will approach the listing agent or seller directly. They will offer to purchase the home and handle all of the negotiations themselves. Once the home is under contract, the buyer will re-list the home for sale at a higher price while they negotiate their short sale offer with the bank at a lower price. If they are successful, they will profit on the yield between their negotiated short sale amount and what their buyer offer to pay.
The Danger: 1. The investor has no intention of ever really closing on the home. If the bank and investor cannot agree on a low price, they are under no obligation to complete the transaction with the higher-priced buyer. 2. They are only looking out for themselves and, as a result, they may be compromising your sale. 3. Lenders are wary of quick sales and as a result, you could make your home not saleable for six months.
Consult with your attorney if you are ever approached with an investor or agent offering to purchase your home and handle the negotiations for you.
Up-Front Fees for Negotiating a Short Sale or Loan Modification
In North Carolina, it is illegal to charge for mortgage loan modification services for homeowners in need. That does not stop for-profit companies and even the occasional scam artist from con-ning homeowners out of a few thousand dollars for these services.
Your local HUD community conselor is the best place for you to turn for assistance with a loan modification. For short sales, ask your agent if they charge up-front fees and move on if they do. In a short sale, the bank will cover your real estate agent's fees at closing.
Short Sale Land-Installment Contract
If a buyer requests that you assign the deed of your house over to them outside of a traditional closing, that should raise a giant red flag. Avoid any "deed assignment" contracts or offers to assume your mortgage. This is quite simple: unless you receive cash in hand to bring your mortgage current and they are willing to lease from you, ignore these offers
Short Sale Offers that Promise Guarantees
Any offer that has a guarantee of success for a fee with regards to a short sale are absolutely bogus. In a short sale, there are dozens of factors that determine whether or not your HUD will be approved by the lender. Therefore, anyone boasting such claims either has very little experienced in distressed sales or they have bad intentions.
Advice to Stop Paying Your Mortgage and Not Speak With the Lender
It is never advised to intentionally miss a mortgage payment in order to obtain a short sale. We have worked with clients who have received this advice from their servicer and are now in a much worse position financially as a result. If you have a hardship and are having trouble making your mortgage payment, either reach out to your HUD community counselor for FREE assistance or an experienced agent for a short sale. You should also contact your mortgage lender and begin exploring your options to help avoid foreclosure.
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