Foreclosure Consultants: How to tell the scams from the legitimate
Misfortune sometimes makes you a target for dishonest people. When your mortgage lender files a court action to foreclose on your house, the fact that you are behind on your payments becomes a matter of public record. Scam artists use this information to target people. Because of this, the federal and state governments have put in place safeguards to protect potential victims.
Foreclosure Scams Work in Different Ways
Foreclosure consultants may try to convince you that they can get the terms of your home loan changed. Alternatively, they will offer to get involved with the foreclosure sale to collect any extra money that belongs to you. These "consultants" typically charge high fees for their services.
They may require you to place a lien on your house to make sure you pay or to sign an agreement that will let the consultant collect foreclosure sale proceeds for you. Scam artists often charge you for information and services you could get on your own for free.
Legitimate Foreclosure Consultants Are Registered
Although foreclosure scams can be a problem, there are legitimate foreclosure consultants who can help you manage the process. Many states have passed laws to stop foreclosure scams, so the legitimate service providers can be identified.
Some legitimate foreclosure consultants register with the state attorney general's office. Others deposit money with the state in case the consultant is sued.
State Regulations on Foreclosure Consulting Protect Consumers
States have placed restrictions on foreclosure consulting. Many states require all foreclosure consultant contracts to be in writing. Further, the agreement must include basic information that explains the homeowner's rights.
Some states won't allow foreclosure consultants to collect payment until after the promised service is performed. They also list circumstances that allow homeowners to back out of an agreement.
Legitimate Foreclosure Consultants Come With Recommendations
The US Department of Housing and Urban Development (HUD) has a list of organizations and consultants that can help homeowners who are in default on their HUD mortgages. The Better Business Bureau of your local area will often have a listing of legitimate service providers.
You can always call the local department of consumer protection or state attorney general's office to check if complaints have been filed against a particular consultant.
A Forclosure Lawyer Can Help
The law surrounding foreclosures on residential real estate is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a real estate lawyer.